document resume official cohort default rate guide, fy ...the fy 1996 official cohort default rate...

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HE 031 479

Official Cohort Default Rate Guide, FY 1996.Department of Education, Washington, DC. Default ManagementDiv.

1998-10-00269p.U.S. Department of Education, Default Management Division,ROB-3, Room 3905, 600 Independence Ave., SW, Washington, DC20202-5353; phone: 202-708-9396; e-mail:[email protected] Evaluative (142)MF01/PC11 Plus Postage.*College Students; Due Process; *Federal Aid; GovernmentSchool Relationship; Higher Education; *Loan Default; LoanRepayment; Records (Forms); Statistical Data; *StudentFinancial Aid; *Student Loan ProgramsFamily Education Loan Program; Federal Direct Student LoanProgram

This publication is intended to accompany the officialcohort default rate notification letters sent to postsecondary schools eachyear and to be used by the schools in preparing materials used for appeals.The guide covers the Federal Family Education Loan Program and/or William D.Ford Direct Loan Program cohort rates and does not contain individual schoolcohort default rates or guaranty agency or lender cohort default rates. Thereport explains how the Department of Education calculates and reports fiscalyear official cohort default rates; the effects these rates have on schools;schools' eligibility to request a rate adjustment; and schools' appealrights. Following an introduction, a section provides general information oncohort default rates, sanctions, and the loan record detail report. Anothersection is on appeals. A subsection for schools offers guidance for thefollowing types of appeals: request for adjustment, erroneous data appeal,improper loan servicing and collection appeal, and exceptional mitigatingcircumstances appeal. A subsection for guaranty agencies provides informationon monthly status reports, remzests for adjustment, the exceptionalmitigating circumstances appeal, the erroneous data appeal, and the improperloan servicing and collection appeal. Six appendices list guaranty agencycontacts, direct loan servicer contacts, Department of Education contacts,text of relevant regulations, and user comments on the guide. (DB)

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U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

document has been reproduced asreceived from the person or organizationoriginating it.

CI Minor changes have been made toimprove reproduction quality.

Points of view or opinions stated in thisdocument do not necessarily representofficial OERI position or policy.

hducaInon

Brivnebn

USD paramorrA off Educia.cHaniUeeffu_ _cdonrinErRnon

General Departmental(Information

U.S. Department of Education Websitehttp://wm.ed.gov

Code of Federal Regulations (CFR)http://ifap.ed.gov

Federal Registerhttp://ifap.ed.gov

Higher Education Act of 1965 (HEA), asamendedhttp://ifap.ed.gov

Student Financial AidOnformation

Federal Student Aid Information CenterIf you need copies of the Department'sregulations, "Dear Colleague" letters, orother student aid publications(800) 433-3243http.//ifap.ed.gov

SFA Customer Support Branch(800) 433-7327

Ordering FAFSAs(800) 284-2788

FAFSA on the Web(800) 801-0576http://www.fafsa.ed.gov

Specific Office-Related lnformation

U.S. Department of EducationDebt Collection Service (DCS)If you have questions about collection of individualdefaulted loans assigned to the Department(800) 621-3115

U.S. Department of EducationGuarantor and Lender Oversight Service (GLOS)If you need information on lender or guaranty agencycohort default rates(202) 401-7482

U.S. Department of EducationInstitutional Participation and Oversight Service(IPOS)If you have questions about recertification, auditresolution, financial analysis, program review, andinstitution improvement(202) 205-0183

U.S. Department of EducationDefault Management DivisionIf you have questions about cohort default rates(202) 708-9396e-mail: I POS_Default_Management_Division@ed .gov

3

CoMeni'M

Introduction

General Information 5

Cohort Default Rates 5

Sanctions 17

Loan Record Detail Report 19

Sample Loan Record Detail Report 23

Request for Loan Record Detail Report Form 27

Appeals

lnformatlon for Schools on Appeals 29

At-A-Glance Information Appeal Tips 29

Appeal Eligibility Worksheet 31

Request forAdjustment 33

Erroneous Data Appeal 43

Improper Loan Servicing and Collection Appeal 71

Exceptional Mitigating Circumstances Appeal 99

Participation Rate Index Criterion 105

Economically Disadvantaged andPlacement Rates Criteria 121

Economically Disadvantaged andCompletion Rates Criteria 145

Withdrawing an Appeal 167

FY 1996 Official Cohort Default Rate Guide

Contents

information for Garanity Agencies onAppeais 173

Background 173

Monthly Status Reports 174

Request forAdjustment 178

Exceptional Mitigating Circumstances Appeal 178

Erroneous Data Appeal 179

Improper Loan Servicing and Collection Appeal 188

'Withdrawing an Appeal 0

197

Appendices

Appendix AGuaranty Agency Contacts

AlNumerical Listing 3

A2Alphabetical Listing 15

Appendix BDirect Loan Servicer Contact

Appendix CU.S. Department of Education Contacts

Appendix DAbbreviations and Acronyms

Appendix EPertinent Parts of the HEA and. :Related Regulations

El HEA

E2Reg ulations 5 9

' .

'Appendii FUser ComMenfs On the FY 1996 Official CohortDefault Rate Guide

User Comments Worksheet 3

FY4996 Official Cohort Default Rate Guide

ntrodueon

What tMs glade?The FY 1996 Official Cohort Default Rate Guide (Guide) is apublication that the U.S. Department of Education (the Department)sends to postsecondary schools along with their official cohort defaultrate notification letters each fiscal year. This guide should be used forthat appeal material that is prepared after the release of the FY 1996official cohort default rates but prior to the release of the FY 1997official cohort default rates. The guide discusses:

o how the Department calculates and reports fiscal year officialcohort default rates,

o the effects these rates have on schools,

o schools' eligibility to request a rate adjustment,

AND

o schools' appeal rights.

This guide is about school Federal FamilyEducation Loan (FFEL) Program and/or WilliamD. Ford Direct Loan (Direct Loan) Programcohort rates.

ft does NOT contain actual school cohort defaultrates.

AND

It does NOT contain guaranty agency orlender cohort default rates.


Official cohort default rates arereleased to the public.

This guide does not discussPerkins cohort default rates.For information on Perkinscohort default rates, please call(202) 708-8242.

If you would like to makecomments on this guide, pleasefill out and return the "UserComments" worksheet on page3 in Appendix F.

Page 1

Introduction

Regulations use the term"weighted average cohort rate"as the name for the rate thatincludes both Direct Loans andFFTL Program Loans. Thisguide uses the term"dual-program cohort rate" todescribe the same rate andealculation.

Page 2

[th student [loans are 'nichAszied n a cohortdefaullt rats?

A cohort default rate is calculated using Federal Family EducationLoan (FFEL) Program loans and/or William D. Ford Direct Loan(Direct Loan) Program loans, creating a snapshot of studentborrowers who entered repayment on their loans during a statutorily-mandated time period. Nonfederal student loans and other federalloans are not included in the calculation.

If a school's former students enter repayment on loans from only one ofthese programs in a given fiscal year, it will receive a cohort defaultrate based solely on the loans entering repayment in that loanprogram. If a school has loans entering repayment from both theFFEL Program and Direct Loan Program, the Department willcalculate a "dual-program" official cohort rate that includes both typesof loans. This means that a school will receive one of the followingtypes of official cohort rates':

(1) an FFEL Program official cohort default rate,

(2) a Direct LOan Program official cohort rate,

OR

(3) a dual-program official cohort rate.

In this guide, the term "cohort default rate"applies toFFEL Program, Direct Loan Program, and dual-program cohort rates unless otherwise stated..

1. 34 CFR § 668.17 (d), (e), and (f)

FY 1996 Official Cohort Default Pahl. -Guide

How a "floc& year cohort defauR rate"cacidated?A school's fiscal year cohort default rate is calculated based on thepercentage of a school's FFEL Program and/or Direct Loan Programstudent borrowers who entered repayment on their student loans in aspecific federal fiscal year (October 1 to September 30) and thendefaulted (or, in the Direct Loan Program, for proprietary non-degreegranting schools, entered into the Income Contingent Repayment[ICR] Plan and met certain conditions) before the end of the followingfiscal year.

The Department calculates cohort default rates for postsecondaryschools using a formula included in the Higher Education Act of 1965,as amended (HEA).

How do student lloan defauR rates affect aschod?There are consequences for schools with official cohort default ratesthat exceed certain thresholds. The HEA and Department regulationsdescribe these consequences and the sanctions that apply when aschool's cohort default rate is at or above certain percentages.2These consequences, sanctions, and threshold percentages aredetailed throughout this guide; in addition, relevant parts of the HEAand the Department's regulations are in Appendix E.

o Specifically, the HEA and the Department's regulationsmandate that a school with an official cohort default rate of25.0 percent or greater for the three most recent fiscal years(in this case, FY 1994, FY 1995, and FY 1996) loses eligibilityto participate in the FFEL Program3 and/or the Direct LoanProgram. Such an institution is ineligible to participate in theFFEL Program and/or Direct Loan Program for the remainderof the fiscal year in which the cohort default rate is releasedand for the two succeeding fiscal years, UNLESS theinstitution successfully appeals its loss of eligibility.4

2. At the time of the publication of this Guide, the loss of FFEL Program and Direct Loan Programeligibility sanctions do NOT apply to historically black colleges and universities, triballycontrolled community colleges, and Navajo community colleges until July 1, 1998. See HEASection 435(a)(2)(C) and 34 CFR § 668.17(b)(5).

3. HEA Section 435(a)(2)4. HEA Section 435(a)(2) and 34 CFR § 668.17(b)

introduction'

See page 7 for more detailedinformation about calculatingcohort default rates.

See page 17 for more detailedinformation regarding sanctions.

FY 1996 Official Cohort Default Rate Guide Page 3

Introduction

To vaiksOatheryour.school" is eligible to appeal,read the specific appealsections beginning on page33 or turn to the AppealEligibility worksheet on page31.

The appeal sections and therequest for adjustment sectionin this guide detail-specificeligibility andsubmissionrequirements.

Page 4

o A school whose official cohort default rate is greater than40.0 percent for a fiscal year may have its eligibility toparticipate in all Title IV student financial assistance programslimited, suspended, or terminated (LS&T).8

The Department will relieve the school of a proposedLS&T action due to high cohort default rates if theschool successfully appeals its cohort default rate andbrings it below 40.1%. Because an LS&T action can beimposed on multiple grounds, however, a reduction in aschool's cohort default rate does not preclude theDepartment from proceeding against the school forother causes.

What t pes of appeais may a schooi submit?A school may have the right to appeal based on:

* erroneous data (see page 43),8

o improper loan servicing and collection (see page 71),7

AND/OR

* exceptional mitigating circumstances (see page 99).8

Appeals on the basis of erroneous data and/orimproper loan servicing and collection addressinformation included when calculating a school's officialcohort default rate; appeals on the basis of exceptionalmitigating circumstances do not address the cohortdefault rate, but deal with specific circumstances thatmay allow a school to continue in the FFEL Programand/or Direct Loan Program.

In addition, a school may submit a request for adjustment to its officialcohort default rate if it challenged errors during the draft data reviewprocess AND the guaranty agency and/or Direct Loan servicercorrectly agreed to make the changes BUT the changes are notreflected in the data used to calculate the official cohort default rate.See page 33 for further information on submitting a request foradjustment.

Note

5. 34 CFR § 668.17(a)(2)6. 34 CFR § 668.17(c)(1)(i)7. 34 CFR § 668.17(h)8. 34 CFR § 668.17(c)(1)(ii)


Cohon leffauMa lea

This section includes information about cohort default rates,sanctions associated with official cohort default rates, and theLoan Record Detail Report (formerly referred to as backupdata).

What a cohort cdefaullt rate?A cohort default rate is the pergentage of a school's studentborrowers who enter repayment on certain FFEL Program and/orDirect Loan Program loans during a particular fiscal year and defaultor meet other certain conditions before the end of the next fiscal year.The cohort default rate may be an FFEL Program cohort default rate,a Direct Loan Program cohort rate, or a dual-program cohort ratedepending on the type or types of student loans that comprise therate.

An FFEL Program cohort default rate' is the cohort default rate forschools whose students have only FEEL Program loans enteringrepayment during a particular fiscal year. It is the percentage of aschool's students who enter repayment on certain FFEL Programloans during a particular fiscal year and default within the fiscal year inwhich the loans entered repayment orthe next fiscal year.

A Direct Loan Program cohort rate' is the cohort rate for schoolswhose students have only Direct Loan Program loans enteringrepayment during a particular fiscal year. It is the percentage of aschool's borrowers who enter repayment on certain Direct LoanProgram loans during a particular fiscal year and default or meet othercertain conditions within the fiscal year in which the loans enteredrepayment or the next fiscal year.

Other conditions: Direct Loan borrowers who attend a non-degreegranting proprietary school Whose scheduled payments under an ICRplan are less than the interest accruing on the.loan are alsoconsidered as in default in the cohort rate if that student enteredrepayment and the ICR repayment condition has existed for at least270 days within the cohort period in question.1. 34 CFR § 668.17(d)2. 34 CFR § 668.17(e)


1 0

This guide will use the term"cohort default rate" to referto a school's FFEL Programcohort'default rate, DirectLoan Program cohort rate, ordual-program cohort rate.

A schooldoes not selectwhether it has an FFEL Programcohort default rate, a DirectLoan Program cohort rate, or adual-program cohort rate. Therate is,detertnined by theDepartment on the basis of thetypes of loans that enterrepayment in a given cohortperiod.

Page 5

General Infotmation Cohort Default Rates

Regulations use the term"weighted average cohort rate."This guide uses the term"dual-program cohort rate" todescribe the same rate andcalculation.

A dual-program cohort rate3 is the cohort rate for schools whosestudent borrowers have both FFEL Program and Direct Loan Programloans entering repayment during a particular fiscal year. It is thepercentage of a school's students who enter repayment on certainFFEL Program and Direct Loan Program loans during a particularfiscal year and default or meet other certain conditions within the fiscalyear in which the loans entered repayment or the next fiscal year.

Otherconditions: Direct Loan borrowers who attend a non-degreegranting proprietary school whose scheduled payments under an ICRplan are less than the interest accruing on the loan are also consideredas in default in the cohort rate if that student entered repayment and theICR repayment condition has existed for at least 270 days within thecohort period in question.

Why s the colon defauDt rate limportant?

The Department may take administrative actions against a school onthe basis of its official cohort default rate(s). The differentadministrative actions associated with high cohort default rates and aschool's appeal rights are discussed beginning on pages 17 and 29,respectively.

Whkc types of °Dans are hIchAded hl the cohortdefaufit rate callciullaUon?

The cohort default rate is calculated on the basis of FFEL Programand/or Direct Loan Program loans. The FFEL Program loans includedin the calculation are subsidized and unsubsidized Federal StaffordLoans (FFEL/Stafford Loans) and Federal Supplernental Loans forStudents (Federal SLS Loans). The Direct Loan Program loansincluded in the calculation are subsidized and unsubsidized FederalDirect Stafford Program Loans (DL/Stafford Loans.)

The following loans are NOT included in the cohort default ratecalculation: Federal PLUS Loans, Federal Direct PLUS Loans,Federal Insured Student Loans, and Federal Perkins Loans.

NoteFederal Consolidation Loans and Federal DirectConsolidation Loans are not counted directly in thecohort default rate calculation. 'However, the status of aconsolidation loan may affect the treatment of the loan(s)that was paid off by the consolidation loan. A discussionof consolidation loans is on page 13.

3. 34 CFR § 668.17(f)Page 6 FY 1996 Official Cohort Default Rate Guide

1 1

General Information Cohort Default Rates

How does the Department caDcullate a schoorscohort deffauR rate?

The formula the Department uses for calculating a school's cohortdefault rate depends on the number of student borrowers from thatschool entering repayment in the particularfiscal year.

Calculation: For a school with 30 or more borrowers enteringrepayment during FY 1996, the FY 1996 cohort default rate iscalculated as follows:4

100

the number of students who entered repayment inFY 1996 and who defaulted or met other certainconditions before the end of FY 1997 (Numerator)

the number of students who entered repaymentin FY 1996 (Denominator)

NoteOther copditions: Direct Loan borrowers whoattend a non-degree granting Proprietary schoolwhose scheduled payments under an ICR Planare less than the interest accruing on the loan arealso consideredin default in the cohort rate if thatrepayment coridition has existed for at least 270days.5

ExaMple: School A certified 90 loans for 90 students thatentered repayment in FY 1996 (denominator). Of thosestudents, 8 defaulted prior tO October 1, 1997 (numerator).School A's cohort default rate is calculated by dividing 8 by 90and multiplying the result by 100 to produce a cohort defaultrate of 8.9%.

100

8

90

4. 34 CFR § 668.17(d), (e), and (f)5. 34 CFR § 668.17(e)(I)(ii)


12

General Information

If a school has fewer than30 borrowers enteringrepaymencthe-pepartmentcalculates in avers& cohortdefault rate.

Page 8

Cohort Default Rates

Calculation: For a school with fewer than 30 borrowers enteringrepayment during FY 1996, the FY 1996 cohort default rate iscalculated as follows:6

100

the number of students who entered repayment inFY 1994, FY 1995, and FY 1996 and whodefaulted or met other certain conditions beforethe end of the fiscal year immediately followingthe fiscal year in which the loan enteredrepayment (Numerator)

the number of students who entered repayment inFY 1994, FY 1995, and FY 1996 (Denominator)

:Other conditions: Direct Loan borrowers whoattend a non-degree granting proprietary schoolWhose scheduled payments underan ICR plan areless than the interest accruing on the loan are alsocOnsidered in default in the cohort rate if thatrepayment condition has existed for at least 270days.'

Example: School B certified loans for the following students:10 students that entered repayment in FY 1994, 20 studentsthat entered repayment in FY 1995, and 29 studentsthatentered repayment in FY 1996. 10+20+29=59 (denominator).Of those 59 students, 2 students entered repayment in FY 1994and defaulted before the end of FY 1995; 6 students enteredrepayment in FY 1995 and defaulted before the end of FY1996; and 4 students entered repayment in FY 1996 anddefaulted before the end of FY 1997. 2+6+4=12 (numerator).School B's average cohort default rate is calculated by dividing12 by 59 and multiplying the result by 100 to produce anaverage cohort default rate of 20.3%.

6. 34 CFR § 668.17(d), (e), and (f)7. 34 CFR § 668.1 7(eX1)(ii)

13 FY 1996 Official Cohort Default Rate Guide


'What if my schod has Dess than 30 borrowersentering repayment but does not have pri4ryear cohort defauft rates?

Your school will receive an unofficial cohortdefault rate.

An unofficial cohort default rate is based on the actual percentage ofborrowers entering repayment in a given fiscal year and defaulting inthat fiscal year or the next fiscal year. A school only receives anunofficial cohort default rate if it has less than 30 borrowers enteringrepayment in a given fiscal year and the school does not have twoprior years of cohort default rate data with which to average thecurrent year data.

An unofficial cohort default rate does not have anyconsequences associated with it and it cannot beappealed UNLESS it is later used as a part of anaverage cohort default rate that results in sanctionsbeing taken against a school.

Flow does the 0 partment determine whichbans are paaced in the denominator of thecaicuiatbn?Loans included in the denominator of the FY 1996 cohort default ratecalculation are FFEL Program and Direct Loan Program loans thatentered repayment in FY 1996.

Different loan types enter repayment under different rules.

FFEL Program Stafford Loans enter repayment on the day ormonth following six months of an uninterrupted grace period after astudent drops below at least half-time enrollment.

The repayment date for FFEL Program Stafford Loansmay be date-specific (for example; 5/16/96) or month-specific (for example, 5/96) if the loan was convertedinto repayment before March 1996. Beginning inMarch 1996, the date entered repayment is date-specific.


14

For a list of specialcircumstances affecting thecohort default rate calculations,see page 14.

Page 9

General Information S Cohort Default Rates

For:alistoIspiaicircumstances affecting thecohort &bilk rate calculation,see page.,14.

Direct Loan Program Stafford Loans enter repaymenton the dayfollowing six months of an uninterrupted grace period aftera studentdrops below at least half-time enrollment.

For any Federal SLS Loan that was not reported in a cohortperiod prior to FY 1993, the following definition applies:

* If a student has both a Federal SLS Loan and a FederalStafford Loan that were both obtained in the same period ofcontinuous enrollment, the date entered repayment fortheFederal SLS Loan is the same as the date entered repaymentfor the Federal Stafford Loan.

o In all other instances, the date entered repayment for theFederal SLS Loan is the day following the day a student isno longer enrolled on at least a half-time basis.

Underthe above guidelines, which were implemented beginning withthe FY 1993 cohort default rates, a loan that was reported as havingentered repayment prior to FY 1993 might also meet the criteria to beincluded in FY 1993 or later. To prevent the possibility ofdouble-counting loans, any Federal SLS Loan that was reported in a cohortperiod prior to FY 1993 will not be reported again.

How does the Department'determhe wDoans ars Maced hl the numerator of thecaOcuDation?

For FFEL Program loans, only defaulted loans are included in thenumerator of the calculation. Under the-HEA, a borrower isconsidered to be in default on the 181st day of delinquency. However,for cohort default rate purposes, a loan is considered to be indefault only if the guaranty agency has paid a default claim on the loanto the lender. The date the guaranty agency reimburses the lender forthe defaulted loàn (the claim paid date or CPD) is used to determine ifthe loan will be placed in the numerator of the calculation.8

8. 34 CFR § 668.17(d)(1)(1)(C)

Page 10FY 1996 Official Cohort Default Rate Guide

15


For Direct Loan Program loans, loans are included in thenumerator of the cohort default rate calculation for all types ofschoolswhen students default.9A Direct Loan borrower is considered in

default on the 181st day of delinquency. However, for cohort defaultrate purposes, a Direct Loan is considered to be in default on the271st day of delinquency. Therefore, the 271st day of delinquency is

used to determine if the loan will be placed in the numerator of thecalculation. In addition, Direct Loans are included in the numerator ofthe cohort default rate calculation for proprietary non-degree-grantinginstitutions if the borrowers entered repayment and have been underan incOme contingent repayment plan for 271 days with scheduledmonthly payments of less than $15 that result in negative amortizationwithin the cohort period in question.1°

This table summarizes when a loan is included in the numeratorof the

cohort default rate calculation.

On the Numerator

(for Cohort Default Rate Purposes)-

---rrEL Program... _.. . . .

'LoansDirect Loan

ProprietaryNon-Degree-

GrantingSchools

Date the insuranceclaim is paid

271st day ofdelinquency

OR

271st day of monthlypayments on an ICRplan that are less than$15 resulting innegative amortization

Other Schools Date the insuranceclaim is paid

271st day ofdelinquency

Please note, a loan is never included in the numerator ofthe cohort default rate calculation unless it is alsoincluded in the denominator of the cohort default ratecalculation.

9. 34 CFR § 668.17(e)(3)10. 34 CFR § 668.17(e)(1)(ii)

FY .1996 Official Cohort Default Rate Guide

G

Page 11

General InformationCohort Default Rates

Page 12

What are the Ume frames of a cohort peRlod?

The following chart outlines the past five cohort periods and the loansincluded in the cohort default rate calculations.

Cohort Periods

:^Cohort period -Loans Included in the Cohort

, DefaUlt Rite 'Calculation*, .,

Period of Ture

FY 1992

students who entered repaymenton their loans in FY 1992

and defaulted in FY 1992 or FY 1993 10-1-91 to 9-30-93students who entered repayment on

their loans in FY 199210-1-91 to 9-30-92

FY 1993




FY 1994




FY 1995


and defaulted in FY 1995 or FY 199610-1-94 to 9-30-96

students who entered repayment ontheir loans in FY 1995 10-1-94 to 9-30-95

FY 1996



their loans in FY 1996 10-1-95 to 9-30-96

* For the FY 1995 and FY 1996 cohort periods, Direct Loan borrowers who attend anon-degree granting proprietary school whose scheduled payments under an ICR plan areless than the interest accruing on the loan are also considered in default in the cohort rate ifthat repayment condition has existed for at least 270 days within the cohort period inquestion.

17FY 1996 Official Cohort Default Rate Guide

General Information

What Df a borrower had more than one DoanenterDng repayment durDng the fiscal year?

If a borrower had more than one loan entering repayment in the samefiscal year, the borrower is counted ONLY once.

Example: Terry enrolled in a two-year program at the localcommunity college and obtained two FFEL Program Staffordloans. Terry graduated in January 1996 and the loans enteredrepayment in July 1996. Terry failed to make any payments onany of the loans. Because a school's cohort default rate iscalculated on the basis of an unduplicated borrower count,Terry is counted ONLY once in the numerator and denominatorof the school's FY 1996 cohort default rate.

Kow does student Doan consoildatnon affect aschooD's cohort default rate?Loans that were repaid by a consolidation loan are counted in theapplicable cohort default rates based on the date on which theunderlying loans entered repayment. As a result, if a student defaults(or, for proprietary non-degree granting schools, makes payments onDirect Loans under the ICR Plan below certain amounts) on aconsolidation loan during the cohort period in which any of theunderlying loans entered repayment, those underlying loans arecounted in default in the cohort default rate for the school where theunderlying loan(s) was received.

Example: After graduating from cosmetology school, Chrishad several loans enter repayment in FY 1996. Chris obtaineda cOnsolidation loan in FY 1997. Chris defaulted on theconsolidation loan before the end of FY 1997. Because theconsolidation loan defaulted within the same cohort period inwhich the underlying loans entered repayment, Chris iscounted once in the numerator and once in the denominator ofthe FY 1996 cohort default rate.

Cohort Default Rates

Cohort default rates arecalculated on the basis of anunduplicated borrower count.Therefore, if a borrower hasmore than one loan enteringrepayment in a cohort defaultrate calculation, that borrowerwill only be counted once in thecohort default rate calculation.

Q. If a student takes outloans while attending College Aand immediately transfers toCollege B and takes outadditional loans, how are theseloans included in each school'scohort default rates?

The loans obtained forattendance'at College A areincluded in College A's cohortdefault rate calculation and theloans obtained for attendance atCollege B are included inCollege B's cohort default ratecalculation.

FY 1996 Official Cohort Default Rate Guide Page 13'

13


The Department frequently receives questions about additionalspecial circumstances that may affect how a particular loan isconsidered in calculating a cohort default rate. The following tableaddresses many of these situations.

Special Circumstances Affecting [-towFY 1996 Cohort Default Rates

are Calculated

Special'Circumstances

Effect on the_ -;NUrnerator

Effect on theDenominator

Borrower defaulted on aloan in FY 1996 or FY1997, but the loan wasthen discharged due todeath, bankruptcy, and/ordisability."

Include in the numeratorbecause the loan defaultedprior to death, bankruptcy,and/or disability.

Include in thedenominator.

Prior to default claimpayment, borrower's loanwas discharged due todeath, bankruptcy, and/ordisability.

Do not include in thenumerator because theloan did not default prior todeath, bankruptcy, and/ordisability.


A payment is made on aloan by the school, itsowner, agent, or anotherentity or individual affiliatedwith the school to avoiddefault by the borrower.12

Include in the numeratorbecause the loan is treatedas in default for cohortdefault rate purposes.


Borrower defaulted butthe loan was rehabilitatedbefore the end of FY1997.'3

Do not include in thenumerator because theloan is not considered indefault.


1 1. 34 CFR § 682.402 and 685.21212. HEA 435(m)(2)(B)13. HEA 435(m)(2)(C). A Direct Loan Program loan is rehabilitated if a borrower has made

12 consecutive on-time monthly payments before the end of the cohort period in which theborrower entered repayment. An FFEL Program loan is rehabilitated if a borrower has made12 consecutive on-time monthly payments before the end of the cohort period in which thestudent entered repayment and the loan is sold to a lender.

Page 14FY 1996.0fficial Cohort Default.Rate-buide

19


Special Circumstances Affecting HowFY 1996 Cohort Default Rates

are Calculated (cont'd)

Special, , _

Circumstances"''Effect onihe-

, , -

Numerator__sEffect,on the: Deriorninator

, . , ,

Borrower paid loan in fullafter defaulting on the loanduring ihe cohort period inwhich the borrower enteredrePayment and theborrowerdid notsuccessfully rehabilitatehis/her loan.

Include in the numeratorbecause the loan defaultedprior to the loan being paidin full and it was notrehabilitated during therelevant cohort period.

Include loan in thedenominator in thefiscal year the loanentered repayment.

Borrower requested andwas granted a repaymentschedule that startedbefore the date thestudent was originallyscheduled to enterrepayment.

Do not include in thenumerator if the loan did .not default.

Include loan in thedenominator in thefiscal year that thenew repaymentschedule start datefalls into.

Fy 1996 Official Cohort Default Rate Guide Pa0 15

20

SancUona

What sanctions are associated with officMcohort defauit rates?

The sanctions associated with official cohort default rates are:

0 initial loss of FFEL Program and/or Direct Loan Programeligibility. This results from FY 1994, FY 1995, and FY 1996official cohort default rates that are equal to or greater than

25.0 percent.'

OR

o extended loss of FFEL Program and/or Direct LoanProgram eligibility. This occurs when a school lost FFELProgram and/or Direct Loan Program eligibility prior to therelease of the FY 1996 official cohort default rate due to threeconsecutive cohort default rates equal to or greaterthan 25.0percent, AND all subsequent cohort default rates have been

equal to or greater than 25.0 percent.'

AND/OR

* possible action to limit, suspend, or terminate (LS&T)eligibility to participate in all Title IV federal studentfinancial assistance programs. This occurs when aschool's FY 1996 official cohort default rate is greater than40.0 percent.'

'tat are thea consequences associated withthese sanctions?

* A school subject to initial or extended loss of FFELProgram and/or Direct Loan Program eligibility loseseligibility to participate in that program for the remainder of thefiscal year in which the school became subject to such a lossand forthe two subsequent fiscal years.4

1. 34 CFR § 668.17(b)2. Id.3. 34 CFR § 668.17(a)(2)4. 34 CFR § 668.17(b)(3)(i) and (b)(3)(ii)


2 1

General InformationSanctions

A school that loses FFELProgram and/or Direct LoanProgram eligibilitymay:,continue to disburse funds afternotification of the loss of theschool's eligibility if thestudents receiving the-disbursements have alreadYreceived initial disbursementsof the funds prior to the schoollosing eligibility.

If a school is subject to LSEAT action, the Department mayinitiate an action to limit, suspend, or terminate eligibility toparticipate in all Title IV federal student financial assistanceprograms.'

Can a school] appeaD the Department's (intent toDmpose these sanctilons?

Yes, a school can appeal the Department's intent to terminate theschool's eligibility to participate in the federally funded programs.The appeals may be based on erroneous data, improper loanservicing, and exceptional mitigating circumstances provided thatyour school meets the eligibility criteria as described in the appealssection of this Guide. Moreover, the appeal procedures described inthe appeals section beginning on page 29 provide the only methodsfor a school to appeal the Department's determination of its cohortdefault rate. In other words, if your school fails to submit a timelycohort default rate appeal or submits an unsuccessful cohort defaultrate appeal, the Department's determination on your school's cohortdefault rates are final.

When does the echoes Doss of engibDDity topartDcDpate Dn the FFEL Program andior DirectLoan Program become effectDve?

o A school's participation in the FFEL Program and/or DirectLoan Program ends 30 calendardays after the date theschool receives notification that it is subject to the loss ofeligibility.'

OR

o If a school timely appeals its loss of eligibility to participate inthe FFEL Program and/or Direct Loan Program, the schoolremains eligible to participate in the FFEL Program and/orDirect Loan Program until the Department issues a finaldecision on the school's appeal(s) that indicates that theschool's appeal(s) was unsuccessful.'

5. 34 CFR § 668.17(a)(2)6. 34 CFR § 668.17(b)(1), (b)(2), and (b)(3)7. 34 CFR § 668.17(b)(6)


22

Loan ilecoTd

RiepicA

What a [loan record detail report?

A Loan Record Detail Report, formerly referred to as backup data orBUD, is a report sent to schools by the Department containinginformation on FFEL Program and/or Direct Loan Program loans that

were used to calculate a school's cohort default rate. The loan recorddetail report provides loan information about specific borrowers whoentered repayment during a specified cohort period.

WMch schoNs recMve offidall lloan recorddetail' reports?The Department sends loan record detail reports to postsecondaryschools with official cohort default rates equal to or greater than 11.0

percent.

3 NoteIf your school would like to review its loan record detailreport, but did not receive it, use the form on page 27 torequest your school's loan record detail report. Yourrequest must be submitted to the Department within 10working days of receiving your school's FY 1996official cohort default rate notification letter.

Why shoLAd a schooll frevew ts officia[l [loanrecord detail] report?

A school should review its report to verify the data used to calculateits official cohort default rate. This rate is used to determine if theschool may be subject to sanctions, so it is important that the schoolverify the accuracy of the data. If errors are found, a school mayqualify to file a request for adjustment and/or an erroneous dataappeal. The school's receipt of the official loan record detail reportmarks the start of strict, regulatory time frames during which the


23

Page 19

General Information

'Please see page 33 for more,-InfOrintion On the draft datareview process

Page 20

Loan Record Detail Report

school may seek adjustment of or appeal from its official cohortdefault rates. The school's failure to timely exercise any rights toappeal or request an adjustment will result in loss of those rights.

When determining if a school qualifies for a request for adjustment,the school should reconcile its records of its draft data review processchallenges against the official loan record detail report to verify that:

o any changes a guaranty agency or Direct Loan servicercorrectly agreed to make to the data as a result of the draftdata review process are properly reflected in the school's FY1996 official loan record detail report.

When checking for erroneous data, a school should review itsrecords and information from outside sources, including but notlimited to lenders, students, guaranty agencies, the Direct Loanservicer, and other schools where formerstudents are enrolled. Theschool should verify that:

o there is no incorrect data in the loan record detail report, suchas:

students who are improperly included

AND/OR

students who are improperly excluded.

If a school finds inaccurate data, then the school may qualify to submita request for adjustment to its official cohort default rate and/or to filean erroneous data appeal. (See the request for adjustment sectionbeginning on page 33 and/or the erroneous data appeal sectionbeginning on page 43.)

How does t le Department produce Ooan recorddetaAEI reports?

The Department produces loan record detail reports using studentloan information that has been electronically submitted to theDepartment's National Student Loan Data System (NSLDS) byguaranty agencies and the Direct Loan servicer.

2 4

FY 1996 Official Cohort Default RatrIt Guide

General Information Loan Record Detail Report

110MI a schoors draft data and offficfiafi data be thesame?Not necessarily. Because guaranty agencies and the Direct Loanservicer regularly update loan records electronically on the basis ofloan information supplied by schools, lenders, and loan servicers, aschool's draft data might differ fr6m its official data.

Are the fioan record detafifi reports subject to thePrfivacy Act?

Yes, the Privacy Act of 1974 and the Family Educational Rights andPrivacy Act (FERPA) applies to all loan record detail reports mailed toschools, guaranty agencies, and the Direct Loan servicer, as thesecontain personally identifying information about students who receivedFFEL Program and/or Direct Loan Program loans. These and otherloan materials are of a private nature. The use of this material iscovered by the Privacy Act and may be governed by state and locallaws and regulations. Recipients should take appropriate steps tosafeguard this material, guarantee that it is used appropriately, andensure that it is discarded properly.

How does a schoofi read an offficfiail !loan recorddetafifi report?

At the topof each page of the official loan rec6rd detail report you willfind the title:

U.S. DEPARTMENT OF EDUCATIONNATIONAL STUDENT LOAN DATA SYSTEM (NSLDS)

COHORT YEAR 1996 OFFICIAL LOAN RECORD DETAIL REPORT (SCHOOL)

The first page of the report contains information about the school. Thisincludes its name, address, Organization ID Number (which is thesame as the school's OPE [Office of Postsecondary Education] IDnumber), and the rate calculation date (also called the run date).

Following this information, there are two horizontal rows of studentloan information, each set off by hashed lines. These rows containcolumn headers for the data contained in the report; each student loanhas two rows of information.

FY 199601ficial Cohort Default Rate Guide

2 5

See page 23 foc a sample loan

reconidetail report.

Page 21

General information

A school does not selectwhether it has:art FFEL Programcohort default rate, itoireZtLoan Program cohort rate, or adual-program cohort rate. Therate is determined by theDepartment on the basis of thetypes of loans that enterrepayment in a given cohortPeFiO4


Example: Find the column header SSN (Social Securitynumber). It is located in the first column header row on the leftside of the report. Students' Social Security numbers arelisted in this column.

Individual student loan data are listed under the column headers. Thedata are sorted in numerical order by Social Security number.

Usage codel in the next to the last column of the loan record detailreport identifies how a particular loan is used in the school's officialcohort default rate calculation.

Usage code 2, in the final column of the report, categorizes how theloan is counted in each individual loan program; this is summarized inthe Individual Program Tally on the final page of the report. TheIndividual Program Tally is NOT a school's official cohort defaultrateit is purely informational, to tell the school the number of loansidentified with each loan program. There is a numerator anddenominator count for both FFEL Program and Direct Loan Programborrowers if a school has loans entering repayment from each loanprogram.

On the final page of the report, for a proprietary non-degree-granting school, the "IC" field identifies the numerator anddenominator count of all of the school's Direct Loan Programborrowers in the cohort period in question who have been under anincome contingent repayment plan for 271 days with scheduledmonthly payments of less than $15 that result in negative amortization.For purposes of the cohort rate calculation, the borrower is included inthe numerator if the 271st day falls within the cohort period.

If the school is NOT a proprietarynon-degree-granting school, OR if itdoes not have any student loans meeting these criteria, this field willbe zero.

A sample of a loan record detail report is on the next two pages.These sample reports include explanations regarding the informationcontained in the report that relates to official cohort default rates.Information about these data elements is at the bottom of the pages.

The rate shown on the final page of the loan recorddetail report, labeled "Actual Default Rate," is a defaultrate calculated on the basis of one fiscal year ofinformation. Refer to your school's notification letter foryour school's official cohort default rate.


2 6

4 Cb

tru-'

e O O. o

Attention:

Name:

Address:

City:

Country:

U.S. DEPARTMENT

NATIONAL STUDENT LOAN

COHORT YEAR

1996 OFFICIAL LOAN

JOHN DOE

STATE COLLEGE

1234 MAIN STREET

LEONARDTOWN

USA

OF EDUCATION'

DATA SYSTEM (NSLDS)

PAGE NO:

1

RECORD DETAIL REPORT (SCHOOL)

Organization ID Number:

00111111

RATE CALCULATION DATE:

09/26/1998

state:

WI

Postal Code:

SSN

Last name

STUDENT

0LENDER/SERVICER

-- Loan

Claim Rsn/

DEFAULT/

Originating

Current

Type

Stat

Code

NegAm Date

0222-22-2222

SMITH

8000040000

8000040000

SL

DU

DF

02/20/1997

23

4

0222-22-2222

SMITH

0101

555

D2

DU

02/20/1997

11111-1111

Program Type:

Both

Years:

1

Original

CLASS

School

Begin Date

End Date

First/M.I.

D.O.B

Repay Date

ALICE

10/01/1995

5

ALICE

10/01/1995

Academic

Level

Guarantor/

Guaranty

Enrollment Stat/

Usage

Amount

Servicer

Loan/Date

Code Date

12

10/21/1951

00111111

$4,000

111

07/15/

6

08/25/1994

7

05/11/1995

1994

10/21/1951

00111111

08/25/1994

05/11/1995

2,300

8

0111

9

07/30/1994

/0

11

01/01/1900

12

2

BFB

13

1

14

The

follo

win

g co

des

indi

cate

the

type

of l

oan:

FF

EL

Pro

gram

Dire

ct L

oan

Pro

gram

(F

DLP

)S

F F

eder

al S

taffo

rd L

oan

D1

- F

DLP

Sta

fford

Loa

nS

U -

Fed

eral

Uns

ubsi

dize

d S

taffo

rd L

oan

02 -

FD

LP U

nsub

sidi

zed

Sta

fford

Loa

nS

L -

Fed

eral

SLS

D4

- F

DLP

PLU

S L

oan

CL

- F

eder

al C

onso

lidat

ion

Loan

D5

FD

LP U

nsub

sidi

zed

Con

solid

atio

nP

L F

eder

al P

LUS

Loa

nLo

anD

6 -

FD

LP S

ubsi

dize

d C

onso

lidat

ion

Loan

07 -

FD

LP P

LUS

Con

solid

atio

n Lo

an

2. L

oan

stet

_ T

he c

urre

nt s

tatu

s of

the

borr

ower

s lo

an. S

ee th

e ch

art o

n pa

ge25

for

a lis

ting

of lo

an s

tatu

s co

des.

3. C

laim

Rsn

Cod

e.-

Thi

s fie

ld c

onta

ins

a co

de if

an

insu

ranc

e cl

aim

was

paid

See

the

char

t on

page

26

for

a lis

ting

of c

laim

rea

son

code

s.

4. D

efau

lt/N

egA

m D

ate

- T

he d

ate

the

loan

def

aulte

d fo

r co

hort

def

ault

rate

purp

oses

OR

for

prop

rieta

ry n

on-d

egre

e-gr

antin

g sc

hool

s, th

e 27

1st d

ay o

n an

ICR

plan

with

sch

edul

ed m

onth

ly p

aym

ents

of $

15 o

r le

ss w

hich

res

ult i

n ne

gativ

eam

ortiz

atio

n. T

his

date

.det

erni

ines

if a

loan

is in

the

num

erat

or o

f the

cal

cula

tion.

5. R

epay

Dat

e -

The

dat

e th

e lo

an e

nter

ed r

epay

men

t. T

his

date

dete

rmin

es if

alo

an is

in th

e de

nom

inat

or o

f the

cal

cula

tion.

6. B

egin

Cla

ss D

ate

_ T

he d

ate

clas

ses

wer

e sc

hedu

led

to s

tart

for

the

loan

per

iod

cove

red

by th

e lo

an.

7. E

nd C

lass

Dat

e _

The

dat

e cl

asse

s w

ere

sche

dule

d to

end

for

the

loan

per

iod

cove

red

by th

e lo

an.

8. A

mou

nt -

The

full

amou

nt o

f the

loan

to CD rs.)

'co

27B

EST

col

ET

AV

M1

LIS

9. G

uara

ntor

lSer

vice

r -

The

cod

e th

at id

entif

ies

the

guar

anty

age

ncy

orD

irect

Loa

nS

ervi

cer.

The

se c

odes

are

pro

vide

d in

App

endi

x A

(G

uara

nty

Age

ncy

cont

act l

ist)

and

App

endi

x B

(D

irect

Loa

n S

ervi

cer

cont

act l

ist)

. Sub

mit

chal

leng

es to

thes

eor

gani

zatio

ns a

t the

add

ress

es p

rovi

ded.

10. G

uara

nty

Loan

Dat

e T

he d

ate

the

guar

anty

age

ncy

insu

red

the

FF

EL

Pro

gram

loan

for

the

lend

er O

R th

e fir

st d

ate

of d

isbu

rsem

ent o

f the

Dire

ct L

oan

Pro

gram

loan

.

11. E

nrol

lmen

t Cod

e _

The

follo

win

g co

des

indi

cate

the

stud

ent's

cur

rent

enr

ollm

ent

stat

us a

s re

port

ed th

roug

h th

e S

SC

R, o

r ot

her

stat

us u

pdat

es:

A A

ppro

ved

leav

e of

abs

ence

L -

Less

than

hal

f tim

eD

Dec

ease

dN

- N

ot a

vaila

ble

F -

Ful

l tim

eW

- W

ithdr

awn

G -

Gra

duat

edX

- N

ever

atte

nded

HH

alf t

ime

or m

ore,

but

less

than

full

time

Z -

No

reco

rd fo

und

12. E

nrol

lmen

t Dat

eIn

dica

tes

the

date

the

stud

ent's

cur

rent

enr

ollm

ent s

tatu

sch

ange

d. If

no

data

is a

vaila

ble,

the

guar

anty

age

ncy

or D

irect

Loa

n se

rvic

er m

ayus

e th

e da

te o

f 01/

01/1

900.

13.

Offi

cial

Coh

ort D

efau

lt R

ate

Usa

ge _

Indi

cate

s ho

w th

e lo

an w

asco

unte

d in

the

Offi

cial

coh

ort d

efau

lt ra

te.

D -

Den

omin

ator

onl

y-

Not

Use

dB

Bot

h N

umer

ator

and

Den

omin

ator

E -

Elig

ible

, but

not

cou

nted

14. F

FE

L P

rogr

am/D

irect

Loa

n P

rogr

am U

sage

-In

dica

tes

how

the

loan

wou

ld b

eco

unte

d in

the

FF

EL

Pro

gram

and

/or

Dire

ct L

oan

Pro

gram

coh

ort d

efau

lt ra

te. T

heco

des

incl

ude:

FF

EL

Pro

gram

Dire

ct L

oan

(DL)

Pro

gram

FD

FF

EL

Den

omin

ator

DD

DL

Den

omin

ator

FB

- F

FE

L N

umer

ator

and

Den

omin

ator

DB

- D

L N

umer

ator

/Den

omin

ator

NN

ot U

sed

IC -

ICR

(N

egat

ive

Am

ortiz

atio

n on

ly)

EE

ligib

le, b

ut n

ot c

ount

edN

-N

ot U

sed

EE

ligib

le, b

ut n

ot c

ount

ed

2 9

Attention:

Name:

Address:

City:

Country:

U.S. DEPARTMENT OF EDUCATION

RATE CALCULATION DATE:

09/26/1998

NATIONAL STUDENT LOAN

COHORT YEAR

1996 OFFICIAL LOAN

JOHN DOE

STATE COLLEGE

1234 MAIN STREET

LEONARDTOWN

USA

SSN

Last name

STUDENT

DATA SYSTEM (NSLDS)

.PAGE NO:

5

RECORD DETAIL REPORT (SCHOOL)

Organization ID Number:

00111111

State:

WI

Postal Code:

11111-1111

Program Type:

Both

Years:

1

Original

CLASS

School

Begin Date

End Date

First/M.I.

D.O.B

0LENDER/SERVICER

Loan

Claim Rsn/

DEFAULT/

Originating

Current

Type Stat

Code.

NegAm Date

Repay Date

FFEL

DIRECT

Academic

Level

Guarantor/

Guaranty

Enrollment Stat/

Usage

Amount

Servicer

Loan/Date

Code Date

12

DUAL

1 TOTAL DOLLARS IN DEFAULT

7,900

5,500

12,500

2 TOTAL DOLLARS IN REPAYMENT

28,400

11,365

41,365

3 TOTAL INSURANCE. CLAIM PAYMENTS':

6,00

0

4 Actual Numerator Count

:3

5 Actual Denominator Count:

58 Actual Default Rate:

60.0

(Based on Outstanding Principal Balance)

(Based on Outstanding Principal Balance)

9 Report Count

:3(B Usage 1 Codes only)

10 Report Count

:5(D & B Usage 1 Codes)

6 INDIVIDUAL PROGRAM TALLY:

FFEL:

2/5

DIRECT :

2/4.

7 Appealed Rate flag:

N

End of Loan Record Detail Report

11 I

C:

0(Negative Amortization Only)

1. T

otal

dol

lars

in d

efau

lt -

FE

EL

Pro

gram

and

Dire

ct L

oan

Pro

gram

ent

ries

indi

cate

the

tota

l dol

lar

volu

me

for

defa

ulte

d lo

ans.

The

Dua

l Pro

gram

ent

ryre

pres

ents

an

undu

plic

ated

bor

row

er c

ount

of d

olla

rs in

def

ault.

2. T

otal

dol

lars

in r

epay

men

tF

FE

L P

rogr

am a

nd D

irect

Loa

n P

rogr

am e

ntrie

sin

dica

te th

e to

tal d

olla

r fo

r lo

ans

that

hav

e en

tere

d re

paym

ent.

The

Dua

l Pro

gram

entr

y re

pres

ents

an

undu

plic

ated

bor

row

er c

ount

of d

olla

rs in

rep

aym

ent.

3. T

otal

insu

ranc

e cl

aim

pay

men

tsIn

dica

tes

the

tota

l am

ount

of i

nsur

ance

cla

ims

paid

.

4. A

ctua

l Num

erat

or C

ount

- T

he to

tal n

umbe

r of

und

uplic

ated

bor

row

ers

used

inth

e nu

mer

ator

of t

he c

ohor

t def

ault

rate

.

5. A

ctua

l Den

omin

ator

Cou

nt -

The

tota

l num

ber

of u

ndup

licat

ed b

orro

wer

s in

the

deno

min

ator

of t

he c

ohor

t def

ault

rate

.

6. In

divi

dual

Pro

gram

Tal

ly -

The

tota

l num

ber

of u

ndup

licat

ed b

orro

wer

s co

unte

din

the

num

erat

or a

nd d

enom

inat

or o

f the

FF

EL

Pro

gram

and

/or

Dire

ct L

oan

Pro

gram

s.

7. A

ppea

led

Rat

e F

lag

Indi

cate

s w

heth

er th

e co

hort

def

ault

rate

has

bee

nch

ange

d du

e to

an

appe

al.

D -

Dire

ct -

sch

ool c

ohor

t def

ault

rate

alte

red

due

to it

s ow

n ap

peal

I - In

dire

ct -

sch

ool c

ohor

t def

ault

rate

alte

red

due

to a

n ap

peal

file

d by

a d

iffer

ent

scho

ol in

a c

ombi

natio

n/su

bstit

utio

n/m

erge

r.N

No

App

eal -

sch

ool c

ohor

t def

ault

rate

not

alte

red

by a

n ap

peal

U -

Unk

now

n -

appe

al s

tatu

s un

know

n fo

r co

hort

def

ault

rate

prio

r to

FY

199

3

8. A

ctua

l Def

ault

Rat

e -

The

FY

199

6 co

hort

def

ault

rate

.It

will

not

ref

lect

the

offic

ial c

ohor

t def

ault

rate

if th

e sc

hool

has

less

than

30

borr

ower

s en

terin

g re

paym

ent

or if

the

scho

ol is

invo

lved

in a

com

bina

tion/

subs

titut

ion/

mer

ger.

The

rat

e sh

own

onth

e fin

al p

age

of th

e lo

an r

ecor

d de

tail

repo

rt, l

abel

ed "

Act

ual D

efau

lt R

ate,

" is

ade

faul

t rat

e ca

lcul

ated

on

the

basi

s of

one

fisc

al y

ear

of in

form

atio

n. R

efer

to y

our

scho

ol's

not

ifica

tion

lette

r fo

r yo

ur s

choo

l's o

ffici

al c

ohor

t def

ault

rate

.

9. R

epor

t Cou

nt -

The

num

erat

or c

ount

ref

lect

ed in

the

loan

rec

ord

deta

il re

port

.M

ay d

iffer

from

the

Act

ual N

umer

ator

Cou

nt d

ue to

app

eal a

djus

tmen

ts o

r du

e to

aver

age

rate

s. T

his

is n

ot n

eces

saril

y th

e co

unt u

sed

in th

e O

ffici

al c

ohor

tde

faul

t rat

e.

10. R

epor

t Cou

nt -

The

den

omin

ator

cou

nt r

efle

cted

in th

e lo

an r

ecor

d de

tail

repo

rt.

May

diff

er fr

om th

e A

ctua

l Den

omin

ator

Cou

nt d

ue to

app

eal a

djus

tmen

ts o

rav

erag

e ra

tes.

Thi

s is

not

nec

essa

rily

the

coun

t use

d in

the

Offi

cial

coh

ort

defa

ult r

ate.

11. I

C -

The

num

ber

of u

ndup

licat

ed b

orro

wer

s m

akin

g sc

hedu

led

mon

thly

pay

men

tsof

less

than

$15

.00

on a

n IC

R p

lan

and

resu

lting

in n

egat

ive

amor

tizat

ion

effe

ctiv

e th

e27

1st d

ay th

e ci

rcum

stan

ces

pers

ist.

Thi

s fie

ld o

nly

appl

ies

to p

ropr

ieta

ryno

n-de

gree

-gra

ntin

g sc

hool

s.

BE

ST C

ON

MA

ILA

BL

E

General Information

Loan Status Codes

CODE STATUS

BC ''''' Bankruptcy-ClaimrDischarg'ed

BK

:

- ,,--

7

Bankruptcy Claim, Active

6nceled 7

Deferred

'DefaUlted, theribankrupt, Active,-;Chapter 13

Defaulted, Compromise

Defaulted then Died

Death

7Diiabilitjf -.,,

CA

DA6DC

DO, _

D E

.-, Of ---,-Th

DK

DL

DO

,

Defaulted, then Bankrupt, Discharged,Chapter 13

Defaulted', in Litigation

Defaulted, then Bankrupt, Active, Other

DP

DS

apu-DIN :

DX

, FB

ID

OD ,

_

' Defaulted, Paill-In=full' '

Defaulted, then Disabled

Defaulted, Collection Terminated

. ,--

--

. Defaulted, Unresolved

Defaulted, Write-Off_:

_

Defaulted, Six Consecutive Payments

Forbearance

In School or Grace Period

Defaulted, then Bankrupt, Dischirged,Other I . , - ,A. + + ,,-

P C

PF

Paid-In-Full through Consolidation_

Paid-In-Full -: RP

-,

RP

Refinanced ,

In Repayment , _

..-.: p : Uninsured/Unreinsured

FY 1996 Official Cohort Default Rate GUide

31


Page 25

General Information

Page 26


Claim Reason Codes

CODE STATUS

BO

D C

DD''

DF

i

FC

IX

°

fti:BankiUPtCY, th'aplei 13

FFEL Bankruptcy, Other

FLCloed ;:Sôho.p1. .

FFEL Cured Default

Ffal)eilhFFEL Default

ffEL 'Disability'

FFEL False Certification

Difect,Loan, Inoome Contingent Negative--, AMoitzation

Direct Loan, Defaulted IncomeContingent Negative Amortization (withthe Department)

3 2FY 1996 Official Cohort Default Rate Guide

General Information

Request forLOAM RECORD DETAL REPORT


Please TYPE or PRINT the following to ensure proper delivery.

OPE IDN:School Name:School Mailing Address:

Telephone number: ( )

Choose ONE format:

Print Out (Hard Copy)OR

U 3.5" Diskette

Choose ONE Doan record detail report:

FY 1996 Official Cohort Default RateORFY 1994, FY 1995, and FY 1996Official Cohort Default Rates

The loan record detail report can only be requested once. Please providethe signature, name, and title of the authorizing official making this request.Please note that your school must request the loan record detail report fromthe Department within 10 working days of receiving its official cohortdefault rate notification letter. Please allow at least two weeks from the timethe Department receives your school's request for your school to receive theloan record detail report.

Name of Official:Title of Official:Signature of Official:Date:

If sent by commercial overnight mail/courierdelivery, send your request for loan record detailreport to:

U.S. Department of EducationDefault Management DivisionAttn: Request for Loan Record Detail ReportROB-3, Room 39057th and D Streets, SWWashington, DC 20202-5353


If sent by U.S. Postal Service, send your request for loanrecord detail report to:

U.S. Department of EducationDefault Management DivisionAttn: Request for Loan Record Detail ReportROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

3 3

Page 27

1

hiffomnsanon

Apped Tnpla

EHRubHilty

With one exception, to appeal your school's official cohortdefault rate, your school must be subject to sanctions.

The exception: A school with an FY 1996 official cohortdefault rate of 20.0 percent or greater may submit an appealon the basis of improper loan servicing and collection.

BasDs of AppealThere are three types of appeals:

o erroneous data,

o improper loan servicing and collection, and

o exceptional mitigating circumstances.

The appeal eligibility worksheet following these tips can helpyour school determine if it qualifies to submit any of theseappeals. If your school is submitting an appeal, pleasethoroughly read the relevant appeal sections beginning onpage 43.

Request for AdjustmentIn addition to the three types of appeals noted above, a schoolmay submit a request for adjustment. To submit a request foradjustment, your school does NOT have to be subject tosanctions. Rather, your school may submit a request foradjustment if, during the draft data review process, a guarantyagency or Direct Loan servicer correctly agreed to make acorrection to your school's data BUT the correction does notappear in your school's official loan record detail report.


3 4

Sanctions are specificrestrictions on your school'sparticipation in Title IV federalstudent financial assistanceprogriimi.See page 17-for aspecific discussion on the typesof sanctions that may occurbased on your cohort defaultrate.

Page 29

Appeals At-A-Glance Information

The Department will not acceptany appeal correspondence byfacsmile (fax) or e-mail.

Page 30

mo

Timing is critical. If your school fails to meet establisheddeadlines, the U.S. Department of Education (Department) willNOT review your school's appeal or request for adjustment.

When a number of days is given (for example, "within 10working days"), it means the information must be SENTto the Department within the stated time period. If thesubmission due date falls on a weekend or a federalholiday, a school may send the information to theDepartment no later than the next federal business day.

Proof of DeHveryThe Department recommends that your school send all appealcorrespondence return receipt requested or via commercialovernight mail/courier delivery. This will be useful to yourschool if it is asked to authenticate the timeliness of its appeal.

Copulas to the Departm 011

Whenever your school sends correspondence to a guarantyagency and/or Direct Loan servicer, it must simultaneouslysend a copy tO the Department's Default Management Divisionat the address in Appendix C.

Wthdrawing an Ap II

If your school decides to withdraw an appeal, it should notify theDepartment, in writing, and send a copy to the relevantguaranty agencies and/or Direct Loan servicer. Please seepage 167 for information on withdrawing an appeal.

Rnall. DedsionAppealing your school's official cohort default rate to theDepartment is the only administrative review available to yourschool. The Department's decision is final and no furtheradministrative review is provided.

3 5


AP

PE

AL

ELI

GIB

ILIT

Y W

OR

KS

HE

ET

Ple

ase

refe

r to

you

r sc

hool

's m

ost r

ecen

t offi

cial

coh

ort d

efau

lt ra

te n

otifi

catio

n le

tter

for

your

scho

ol's

thre

e m

ost

rece

nt c

ohor

t def

ault

rate

s.

Offi

cial

FY

199

6co

hort

def

ault

rate

bel w

20.

0%

(No

San

ctio

ns)

Offi

cial

FY

199

6co

hort

def

ault

rate

20.0

%-

40.0

%(N

o S

anct

ions

)

Offi

cial

FY

199

6, F

Y19

95, A

ND

FY

199

4co

hort

def

ault

rate

s

25.0

% o

r gr

e te

r(S

ubje

ct to

Initi

al lo

ss o

fF

FE

L/D

irect

Loa

n P

rogr

amE

ligib

ility

)

Offi

cial

FY

1996

coh

ort

defa

ult r

ate

25.0

% o

r gr

eate

rA

ND

sch

ool l

ost e

ligib

ility

due

to F

Y 1

995,

FY

199

4,-a

nd F

Y 1

993

coho

rt d

efau

lt ra

tes

(Sub

ject

to E

xten

ded

loss

of

FF

EL/

Dire

ct L

oan

Pro

gram

Elig

ibili

ty)

Offi

cial

FY

199

6 co

hort

defa

ult r

ate

40.1

% ir

gre

ater

and

NO

T s

ubje

ct to

initi

allo

ss o

f FF

EL/

Dire

ct L

oan

Pro

gram

Elig

ibili

ty

(LS

&T

Onl

y)

You

r sc

hool

can

sub

mit:

You

r sc

hool

can

sub

mit:

You

r sc

hool

can

sub

mit:

You

r sc

hool

can

sub

mit:

You

r sc

hool

can

sub

mit:

oF

Y 1

996

Req

uest

for

oF

Y 1

996

Req

uest

for

oF

Y 1

996

Req

uest

for

*F

Y 1

996

Req

uest

for

oF

Y 1

996

Req

uest

for

Adj

ustm

ent

Adj

ustm

ent

Adj

ustm

ent

Adj

ustm

ent

Adj

ustm

ent

oF

Y 1

996

Impr

oper

oF

Y 1

996,

FY

199

5 an

do

FY

199

6 E

rron

eous

oF

Y 1

996

Err

oneo

usLo

an S

ervi

cing

FY

199

4 E

rron

eous

Dat

a A

ppea

lD

ata

App

eal

App

eal

o

Dat

a A

ppea

l'

FY

199

6, F

Y 1

995

and

oF

Y 1

996

Impr

oper

Loan

Ser

vici

ngo

FY

199

6 Im

prop

erLo

an S

ervi

cing

FY

199

4 Im

prop

erA

ppea

lA

ppea

lLo

an S

ervi

cing

App

eal2

oF

Y 1

996

Exc

eptio

nal

oF

Y 1

996

Exc

eptio

nal

oF

Y 1

996

Exc

eptio

nal

Miti

gatin

gC

ircum

stan

ces

Miti

gatin

gC

ircum

stan

ces

Miti

gatin

gA

ppea

lA

ppea

lC

ircum

stan

ces

App

eal

1 P

rovi

ded

that

you

r sc

hool

has

not

pre

viou

sly

appe

aled

thes

e ye

ars

base

d on

err

oneo

us d

ata.

2 P

rovi

ded

that

you

r sc

hool

has

not

pre

viou

sly

appe

aled

thes

e ye

ars

base

d on

impr

oper

loan

ser

vici

ng.

If yo

ur s

choo

l is

subm

ittin

g an

app

eal o

r re

ques

t for

adj

ustm

ent,

plea

se th

orou

ghly

rea

d th

e re

leva

ntse

ctio

ns in

this

Gui

de.

3 J

3 '7

ues2 ffOr AcigusameM

Any school may request that the Department adjust its FY 1996official cohort default rate if:

(1) it submitted a challenge of its draft cohort default rate data to aguaranty agency and/or Direct Loan servicer during the FY1996 draft data review process,

AND

(2) the guaranty agency and/or Direct Loan servicer correctlyagreed to make changes to the cohort default rate data duringthe draft data review process,

BUT

(3) the changes are not reflected in the school's FY 1996 officialloan record detail report.

The draft data review process is the opportunityprovided to schools to review and correct cohort defaultrate errors with the guaranty agencies and/or DirectLoan servicer before the official cohort default rates arecalculated. Refer to the Department's FY 1996 DraftCohort Default Rate Review Guide for additionalinformation on this process.

the purpose of a request foracUustment?

A request for adjustment assures that a school's cohort default ratecalculation reflects changes that were correctly agreed to during thedraft data review process.


33

A school does NOT have to besubject to sanctions to requestan adjustment.

. znY. school submit a

request for adjustment becauseincorrect new data appeared inthe official loan record detailreport?

No, your school canonlysubmit a request foridjustiiient if your schoolChallenged4raft data during thedrafttattreview process andthe-gUaranty agency and/orDirect Loan servicer agreed tomake the.changes but the

:changes were not reflected in theFY 1996 official loan recorddetail report. However, yourschool may be eligible to file anerroneous data appeal on thebasis of incorrect new data. Seepage 43.

Page 33

AppealsRequest for Adjustment

All schools with an FY 1996official cohort default rate of11.0percelitorpeater.WiW'receive the FY 1996 officialloan record detail report withthe FY 1996 official cohortdefault rate notification letter.

Important:. At this point,schools have 10 working daysto act.

is a request for adhastment a type of erroneousdata appeai?No. A request for adjustment is not a type of erroneous data appeal.Erroneous data appeals concern disputed data or incorrect new data.See page 43 for more information on erroneous data appeals.

Does my schoo l! have to be subkact tosanctions to request an aciNstment?A school does NOT have to be subject to sanctions to request anadjustment, but it must meet the three eligibility requirementsdescribed on the previous page.

A school may be eligible to submit both a request foradjustment and an erroneous data appeal. Ifa school issubmitting both, the two have different deadlines andstandards, and they MUST be submitted separately.See page 43 for more information on erroneous dataappeals.

hat are the time frames and procedures forsubmitting a request for adNstment?Timing is critical. Within 10 working days of receiving its officialcohort default rate notification letter, your school must:

o request the loan record detail report from the Department ifyour school did not receive the loan record detail report with itsofficial cohort default rate. (See request form on page 27.)

Within 10 working days of receipt of the official loan record detailreport, your school must:

o compare the guaranty agency and/or Direct Loan servicerresponse(s) from the draft data review process to its officialloan record detail report,

AND


3 9

Appeals

° if it discovers that a change a guaranty agency and/or DirectLoan servicer correctly agreed to make during the draft datareview process was NOT made,

THEN

it may submit a request for adjustment to the Department.

Your school's request for adjustment to the Department must be sentwithin 10 working days of receiving its official cohort default rateloan record detail report.

If your school does not meet this 10-working-day deadline, theDepartment will NOT review the request for adjustment.

How shoukl my schod submiit a request forad,lustment to the Department?

The Department recommends that your school submit a request foradjustment in a single, tabbed binder, and mail it return receiptrequested or via commercial overnight mail/courier delivery.

The recommended tabs and materials are shown on the next page.

FY 1996 Official Conon Default Rate Guide

4 0

Request for Adjustment

The Department tracks receiptof all notification letters andloan record detail reports.

Q. May my schoolsubmit its request foradjustment with its erroneousdata appeal and/or improperloan servicing appeal?

No. Your school'srequest for adjustment must besubmitted separately andwithin 10 working days ofyour school receiving itsofficial loan record detailreport.

Page 35

Appeals Request for Adjustment

A school does NOT need tosubmit its loan record detailreport to the Department

The section behind Tab 1 contains:

p a letter on your school's letterhead with

your school's OPE ID number;

a statement indicating that your school is submitting arequest for adjustment;

4..> the current fiscal year to which the request for adjustmentapplies;

the signature of your school's President/CEO/Owner,followed by a signature block providing the signer's nameand job title;

AND

a notation that a copy of the cover letter is being sent tothe relevant guaranty agency and/or Direct Loan servicer.

(See the sample letter for FY 1996 Request forAdjustment on page 39.)

Tab 1


0 a list of all loans that qualify for an adjustment. (Usespreadsheet FY 1996 Loans Requiring Adjustment on page41, or its equivalent.)

'Tab'


0 a copy (or copies) of the original letter(s) and applicableattachments from the guaranty agency and/or Direct Loanservicer indicating that it agreed to make changes during thedraft data review process.

-!:.Tab 3

Page 36 FY 1996 Official Cohort Default Rate Guide

41

Appeals

If sent by commercial overnight mail/courier delivery, send yourschool's request for adjustment to:

U.S. Department of EducationDefault Management DivisionATTN: RequestforAdjustmentROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service, send your school's request foradjustment to:

U.S. Department of EducationDefault Management DivisionATTN: RequestforAdjustmentROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the relevant information submitted inthe request for adjustment and will not consider informationpostmarked after the 10-working-day deadline. The Department willsend the school and each involved guaranty agency and/or DirectLoan servicer written notification of its decision. The Department'sdecision is final and no further administrative review isprovided.


4 2

Request for Adjustment

The Department will not acceptany appeal correspondence byfacsimile (fax) or e-mail.

The Department recommendssending all correspondence returnreceipt requested or viacommercial overnight mail/courierdelivery.

The Departrnent.:acceptsdeliveries from commercialcouriers and/or hand deliveriesMonday through Friday, 8:00a.m. to 4:30 p.m. (EasternTime).

Page 37

Appeals Request for Adjustment

Our Town A&M Univeri1212 13611 LaneLeonardtown, Wisconsin 12345-6789(123) 456-7890,

November 6, 1998

Sample Letter

U.S. Department of EducationDefault Management Division

ATTN: Request for AdjustMehtROB-3, Room 3905600 IndependenceAvenue, SW ,

Washington, DC 20202-5353

OPE ID#: insert OPE ID#J

Subject: FY 1996 Request for Adjustment

To Whom It May Concern:

Our Town A&M University, OPE ID# [insert OPE 16# , wishes to request an adjustment toits FY 1996 official cohort default rate.'

ThankYou foryour consideration.

Sincerely,

DoeJohn Doe, PresidentOur Town A&M UniVersity

Enclosures

cc: Direct Loan ServicerState GuarantyAgency


4 3

Page '39

Req

uest

far

Adj

ustm

ent

How

to f

ill o

ut F

Y 1

996

Loa

ns R

equi

ring

Adj

ustm

ent s

prea

dshe

et

On

one

spre

adsh

eet,

reco

rd a

ll st

uden

t loa

ns fo

r w

hich

you

rsc

hool

is r

eque

stin

g an

adj

ustm

ent u

sing

a s

prea

dshe

etso

ftwar

e ap

plic

atio

n su

ch a

s Lo

tus

1-2-

3, S

uper

calc

, or

Exc

el.

The

res

ultin

g sp

read

shee

t is

sent

onl

y to

the

Dep

artm

ent.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 11

2 x

11 p

age

in a

land

scap

e (h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

sth

ese

inst

ruct

ions

.

Hea

der:

Foo

ter:

Ent

er F

Y 1

996

Loan

s R

equi

ring

Adj

ustm

ent i

nth

e ce

nter

of t

he h

eade

r ar

ea. I

n th

e le

ft-ha

ndar

ea, e

nter

you

r sc

hool

's n

ame

and

your

sch

ool's

OP

E ID

num

ber.

Ent

er th

e da

te in

the

left

side

of t

he fo

oter

are

a.S

et u

p au

tom

atic

pag

inat

ion

in th

e rig

ht s

ide

ofth

e fo

oter

are

a so

that

the

spec

ific

page

num

ber

and

the

tota

l num

ber

of p

ages

sho

w o

n ea

chpa

ge, f

or e

xam

ple:

pag

e 1

of 1

0 pa

ges.

The

bor

row

ers

liste

d on

the

spre

adsh

eet s

houl

dbe

sor

ted

by:

1. G

uara

nty

agen

cy/D

irect

Loa

n se

rvic

erco

de2.

Bor

row

er's

Soc

ial s

ecur

ity n

umbe

r

The

Dep

artm

ent w

ill o

nly

revi

ew th

e al

lega

tions

liste

d on

the

scho

ol's

spr

eads

heet

.

On

Row

1, e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

lyth

e sa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

2 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

chlo

an r

equi

ring

adju

stm

ent.

Col

umni

:

Col

umn

2:

Col

umn

3:

Col

umn

:

Col

umn

5:

Ent

er th

e bo

rrow

er's

Soc

ial S

ecur

ity n

umbe

r(S

SN

) us

ing

hyph

ens

to s

epar

ate

the

num

bers

(ex

ampl

e: 0

00-0

0-00

00).

Ent

er th

e bo

rrow

er's

nam

e.

Ent

er th

e lo

an ty

pe. U

se F

FE

L/S

F (

Fed

eral

Fam

ily E

duca

tion

Loan

/Sta

fford

), D

L/S

F(D

irect

Loa

n/S

taffo

rd),

or

SLS

(S

uppl

emen

tal

Loan

s fo

r S

tude

nts)

to id

entif

y th

e ty

pe o

flo

an.

Ent

er M

M/D

D/Y

YY

Y (

mon

th/d

ay/y

ear)

toid

entif

y th

e da

te th

e da

ta e

rror

was

ackn

owle

dged

by

the

guar

anty

age

ncy

orD

irect

Loa

n se

rvic

er d

urin

g th

e dr

aft d

ata

revi

ew p

roce

ss.

Ent

er th

e nu

mbe

r co

de o

f the

gua

rant

yag

ency

(fo

und

in A

ppen

dix

A)

or D

irect

Loa

nse

rvic

er (

foun

d in

App

endi

x B

).

Sch

ool N

ame

OP

E ID

Num

ber

srF

Y 1

996

Loan

s R

equi

ring

Adj

ustm

ent

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.)a) 6-

)

1. B

orro

wer

sS

SN

2. B

orro

wer

sna

me

3. T

ype

oflo

an

(FF

EL/

SF

DL/

SF

or S

LS)

4. D

ate

erro

r w

asac

know

ledg

ed b

y th

e

guar

anty

age

ncy

or

Dire

ct L

oan"

Ser

vIce

r

durin

g th

e dr

aft

data

rev

iew

pro

cess

S. C

ode

for

the

guar

anty

age

ncy

or D

irect

Loa

n se

rvic

er

(See

App

endi

ces

A a

nd F

S

for

code

s)

0000

0'J_

cohr

O6D

oeF

FE

L/S

E5,

271.

1P,9

7

-. .4

non

Is )

co 44.

MM

/DD

/YY

YY

BE

ST C

OP

wc

AV

AIL

AB

LE

[sen

d to

U.S

. Dep

artm

ent o

f Edu

catio

n]P

age

ofpa

ges

Piirronsoue laiRa App) ea

If, due in part to your school's FY 1996 official cohort default rate, yourschool is subject to the loss of FFEL Program and/or Direct LoanProgram eligibility or subject to possible action to limit, suspend, orterminate participation in all Title IV federal student financialassistance programs, it may file an erroneous data appeal' if:

o there are disputed data remaining from your school'schallenges during the draft data review process

AND/OR

0 there are incorrect new data appearing in your school'sofficial loan record detail report.

Disputed data and incorrect new data are explained in detailbeginning on page 46.

The draft data review process is the opportunityprovided to schools to review and correct cohort defaultrate errors with the guaranty agencies and/or DirectLoan servicer before the official cohort default rates arecalculated. Refer to the Department's FY 1996 DraftCohort Default Rate Review Guide for additionalinformation on this process.

What ls an erroneous data appeal?

An erroneous data appeal is a challenge submitted to the Departmentalleging that a school's official cohort default rate is inaccuratebecause of incorrect data.'

1. HEA 435(a)(2)(A)(i) and 34 CFR § 668.17(c)(1)(i)2. 34 CFR § 668.17(c)(1)(i)(A)

A school must be subject tosanctions to submit an appealon the basis of erroneous data.

In order to appeal, a schoolmust prove that the recalculatedrate using the corrected datawould, by itself or inconjunction with an improperloan servicing appeal, producean official cohort default ratelower than the applicablesanction threshold.


4e

Appeals

"Outside sources" that aschool will want to reviewinclude, but are not limited to,records of lenders, students,guaranty agencies, the DirectLoan servicer, or other schoolswhere former studentsenrolled.

Erroneous Data Appeal

What are erroneous data?

Erroneous data refers to various types of student loan information usedto calculate your school's official cohort default rate that do not matchyour school's records and/or information from outside sources that yourschool believes are incorrect.

Examples of erroneous data would be if, in reconciling the official loanrecord detail report against its attendance records, your schooldiscovers that:

o some students are not reported correctly in the official cohortdefault rate calculation

AND/OR

* some students are omitted entirely from the calculaticin.

Erroneous data may be "disputed data"and/or "incorrect new data,"both of which are discussed in detail beginning on page 46.

Els a request for adjustment a type of erroneousdata appear?

No, a request for adjustment is NOT an erroneous data appeal.

A request for adjustmentconcerns data that the guaranty agency and/orDirect Loan servicer agreed to change during the draft data reviewprocess but failed to do so. See page 33 for additional,information onrequests for adjustments.

A school might qualify to submitboth an erroneous dataappeal and a request for adjustment. If a school issubmitting both, the two have different deadlines andstandards, and they must be submitted separately.

4 9 FY 1996 Official Cohort Default Rate Guide

Appeals Erroneous Data Appeal

Does my schod have to be suWect tosanctOons to submOt an err'onsous data appear?

Yes, only schools that are subject to sanctions may submit anerroneous data appeal. These sanctions are:

initial loss of FFEL Program and/or Direct Loan Programeligibility.3

OR

extended loss of FFEL Program and/or Direct LoanProgram eligibility.4

AND/OR

o possible action to limit, suspend, or terminate (LS&T)eligibility to participate in all Title IV federal studentfinancial assistance programs.3

Os my schod ellOgObile to f011e an erroneous dataappear?Your school may file an erroneous data appeal if:

(1) it is subject to sanctions,

AND

(2) it believes that disputed data or new data used in calculatingits cohort default rate are incorrect,

AND

(3) recalculating the rate using corrected data would produce anofficial cohort default rate lower than the applicable sanctionthreshold,

AND

(4) it has not previously appealed the official cohort default rate atissue on the basis of erroneous data6.

3. 34 CFR § 668.17(b)4. Id.5. 34 CFR § 668.17(a)(2)6. 34 CFR § 668.17(i)


5 0

Please see page 17 foradditional information onsanctions.

The official cohort default ratemay be reduced below thesanctiOn'thieihOld.eitherbY theresults of an erroneous dataappeal or by combining theresults of an erroneous dataappeal with the results of animproper loan servicing appeal.

A school may appeal a specificfiscal year cohort default rateonly once based on erroneousdata.

Appeals

Allegations of disputed datamust be addressed to therelevant guaranty agency and/orDirect Loan servicer during theofficial cohort default rateappeal process. Theseallegations must be submittedto the guaranty agency and/orDirect Loan servicer within 10working days of receiving yourschool's official cohort defaultrate.


What are "deputed date and Incorrect newdate?,Disputed data and/or incorrect new data are the two grounds on whichsanctioned schools may appeal allegations of erroneous data.

0 Appealing disputed data from the draftdata reviewprocessWhen your school challenges data during the draftdata review process, a guaranty agency and/or Direct Loanservicer does not always agree that there is an error. Afterrelease of the official cohort default rate, your school mayappeal on the basis of disputed data if:

your school challenged errors during the draft data reviewprocess

AND

the guaranty agency and/or Direct Loan servicer did notagree with the errors your school alleged

AND

your school believes that the guaranty agency and/or DirectLoan servicer draft data response to the errors your schoolalleged is incorrect

AND

the alleged errors are included in the calculation of yourschool's official cohort default rate

AND

your school is subject to sanctions.


51

AppealsErroneous Data Appeal

Appealing on the basis of incorrect new dataBecausethe National Student Loan Data System (NSLDS) is updatedregularly with new information from several sources, yourschool's official loan record detail report maydiffer from thedraft loan record detail report. Your school may appeal to theDepartment on the basis of incorrect new data if:

your school discovers that the information on its loan recorddetail report has changed since the draft data reviewprocess,

AND

your school determines that the changes did not result from

its draft data review process challenges,

AND

your school believes the new information is incorrect

AND

your school is subject to sanctions.

If the official data remain the same as the draftdata,and your school did NOT challenge the draft data duringthe draft data review process, it may NOT now appealthe data.' If these data issues are appealed to theDepartment, they will NOT be reviewed.

The checklist on the next page summarizes the eligibility criteria for an

erroneous data appeal. Review the checklist to determine yourschool's eligibility to appeal on the basis of erroneous data.

7. 34 CFR § 668.17(j)(7)


52


Disputed data and incorrect, new data are explained

beginning On page 46.,

Iprornsous Bea Appea07.

bJ Chschilns

To be eligible to appeal its official cohort default rate on the basisof erroneous data, your school must meet ALL of the followingcriteria:

1111 Your school is subject to sanctions

o initial FFEL Program/Direct Loan Program loss

OR

(i) extended FFEL Program/Direct Loan Program loss

AND/OR

O possible action to limit, suspend, or terminate (LS&T)eligibility to participate in all Title IV student financialassistance programs

)(Our school believes that its official cohort default rate isinaccurate because of

O disputed data from the draft data review process

AND/OR

.0 incorrect new data

fl Your school's appeal, if it is successful, results in arecalculation reducing its official cohort default rate belowthe sanction level. (Your school'sappeal may be on thebasis of erroneous data or on the basis of a combination oferroneous data AND improper loan servicing.)

Your school has NOT previously appealed the official cohortdefault rate at issue on the basis of erroneous data

5 3FY 1996 Official Cohort Default Rate Guide

Appeals

h h cohort default rates may my schodappeall?

The sanctions your school is subject todetermine which cohort defaultrates your school may appeal on the basis of erroneous data.

o If your school is subject to initial loss of FFEL Program and/or Direct Loan Program eligibility, it may appeal any or all ofthe three most recent official cohort default rates on which theloss of eligibility is basedas long as it has not previouslyappealed that fiscal year's official cohort default rate calculation

on the basis of erroneous data. This year, your school mayappeal its FY 1994, FY 1995, and FY 1996 cohort default rates.

If your school is subject to extended loss of FFEL Programand/or Direct Loan Program eligibility, it may appeal onlythe most recent year's (FY 1996) official cohort default rate.

If your school is subject to possible action to LS&T itsparticipation in all Title IV federal student financialassistance programs due to its FY 1996 official cohortdefault rate, but it is not subject to initial loss of FFEL Programand/or Direct Loan Program participation, it may appeal onlythe FY 1996 cohort default rate.

If your school is NOT subject to sanctions, your school isnot eligible io file an erroneous data appeal with theDepartment and, if filed, the Department will NOT reviewit. Your school may, however, be eligible to file arequest for adjustment. (See page 33 for details.)


Q. If my school isappealing FY 1994; FY 1995,and FY 1996 official cohortdefault rates on the basis oferroneous dativshouldit mailthree . separatcainals .to theDepartment?

Noall'erroneous dataappeals must be submitted tothe Department in the samemailing.


5 4

Appeals

If my school issubject to both initial loss ofFFEL Program/Direct LoanProgram eligibility andLS&T, which official cohortdefault rates may my schoolappeal?

APL. Your school may

appeal its FY 1994, FY1995, and FY 1996 officialcohort default rates, as longas it has not previouslyappealed that yeses officialcohort default rife'calculation on the basis oferroneous data.


The following table summarizes the official cohort default rates thatyour school may appeal on the basis oferroneous data.

Official Cohort Default Rates That May Zeppealed on the tasis of Erroneous Data

If your school is subject to... Your schOol may...

No sanctions NOT appeal

Initial FFEL/Direct Loan Program loss appeal FY 1994,* FY 1995,*'and FY 1996

Extended FFEL/Direct Loan Programloss

appeal FY 1996

appealTY 1996

Provided that your school has not previously appealed that year's cohort default rateon the basis of erroneous data.

Kow can a successfull erroneous data appeallaffect my schooll's offidall co lort defauft rate?If, as the result of an erroneous data appeal, the Departmentdetermines that incorrect data were used in calculating your school'sofficial cohort default rate, the Department will recalculate the rateusing the corrected data. (The official cohort default rate calculation isexplained on page 7.) This may lower, raise, or not affectyourschool's official cohort default rate.


55

Appeals

How do add ng an' subtracthv lloans from thecohort eiefaaAt rate calcu0aUon affect myschoors offida0 cohort defaufit rate?

Are there Other loans for thesame borrower that are

_ CORRECTLY included in theCDR calculation'?

. .

If ybur School's erroneousdata appeal results in... .

then thefollowing

change totheCohort default,rate results.

If the borrOWer hasno otherloans

in the CDR calculation

adding a defaulted loan +B

adding a non-defaulted loan +D

subtracting a defaulted loan - B

subtracting anon-defaulted loan - D

changing a defaulted loanto a non-defaulted loan - N

If the borrower already hasonly non-defaulted loan(s)

in the CDR calculation (D)

adding a defaulted loan

adding a non-defaultedloan no effect

subtracting anon-defaulted loan no effect

If the borrower already hasdefaulted loan(s)

in the CDR calculation (B)

adding a defaulted loan no effect

adding a non-defaultedloan no effect

subtracting a defaultedloan no effect

subtracting anon-defaulted loan no effect


56


'CDR Cohort Default Rate,

='Nurnérator

= Denominator

=Both Numerator andDenominator


What rolls does a guaranty agency or MrectLoan seMcer have n my echoes erroneousdata appeall to t le Department?A guaranty agency' and/or Direct Loan servicer is required torespond to your school's timely request for verification oferrorinvolving student loans that itguaranteed/serviced and thatwereincluded in your school's official cohort default rate calculationwithin15 working days of receiving your school's request.

If the guaranty agency and/or Direct Loan servicer doesn't respondwithin 16 working days, advise the Department, in writing, of thedelay.

A delayed response from" a guaranty agency9 or DirectLoan servicer does not jeopardize your school's appealrights provided thatyour school timely requested theverification and that your school provided a copy of therequest to the Department when it made the request.

In its response to your school's letter, the guaranty agency and/orDirect Loan servicer will address your school's allegations. .

There are a number of reasons why a guaranty agency and/orDirectLoan servicer might notagree with your school's allegations oferror.For example, your school mighthave:

o made only general allegations about the loan record detailreport and/or the official cohortdefault rate calculation,

failed to notify the guaranty agency and/or Direct Loan servicerof a student's change in status in a timely manner,

o failed to provide supporting documentation for an allegation,

OR

* failed to send allegations of error to the guaranty agency and/or Direct Loan servicer within the 10-working-day time framerequired by regulations.

8. 34 CFR §682.401(b)(15)9. 34 CFR §668.17(c)(8)

FY' 1996 Official Cohort Default Rate Guide

5 7

Appeals

What are the t0me frames and procedures forsubmitt0ng an erroneous data appea0?

Timing is critical when appealing an official cohort default rate on thebasis of erroneous data. The regulatory time frames are as follows:

Within 10 working days of receiving its official cohortdefaultrate and official loan record detail report, your school must

review the loan record detail report,

submit a request letter (see sample letter FY [insertyear(s)] Request for Verification of Error in OfficialLoan Record Detail Report on page 64) to the respectiveguaranty agencies'° and/or Direct Loan servicer,

Submit a list of alleged errors (use spreadsheet FY [insertyear(s)] Request for Verification of Error in OfficialLoan Record Detail Report on page 67, or its equivalent),along with copies of the relevant pages of the loan recorddetail report and supporting documentation, to therespective guaranty agencies" and/or Direct Loan servicer,(See page 59 for instructions on submitting relevant pagesfrom the loan record detail report to guaranty agencies and/or the Direct Loan servicer.)

AND

simultaneously send the Department copies of theRequest for Verification of Error in Official LoanRecord Detail Report letter(s) and your school's list(s) ofalleged errors.12

A guaranty agency" and/or Direct Loan servicer has 15working days to respond to your school's allegations of error.

10. 34 CFR § 668.17(c)(8)(i) and 34 CFR § 668.17(i)11. 34 CFR § 668.17(c)(8)(i)12. 34 CFR § 668.17(c)(8)(ii)13. 34 CFR § 682.401(b)(15)


Important: At this point,schools have 10 working daysto act.

When submitting a request forverification of error to theguaranty agency and/or DirectLoan servicer, a school mustsubmitlioth disputed dataand new data, if the schoolbelieves the data is incorrect.

A school does NOT need tosubmit its loan record detailreport or supportingdocumentation to theDepartment at this time.


5 3


Important: At this point,schools have 5 working daysto act.

It is NOT the responsibility of aguaranty agency and/or DirectLoan Servicer to send a school'serroneous data appeal to theDepartment.

The Department tracks receiptof all guaranty agency andDirect Loan servicer, responses.

If a guaranty agency and/or Direct Loan servicer takesmore than 15 working days to respond, the school'seligibility to appeal is not jeopardized.14 The deadline for aschool to submit its appeal to the Department isdetermined by the date the school receives its finalresponse from all guaranty agencies and/or the Direct Loanservicer.

o Within 5 working days of receiving thefinal guaranty agencyand/or Direct Loan servicer response to alleged errors, yourschool must do one of the following:

(1) Notify the Department that your school has chosennot to appeal (see page 167 on how to withdraw anappeal).

OR

(2) Choose to submit its erroneous data appeal with itsimproper loan servicing appeal, provided that theimproper loan servicing appeal was timely initiated.15

OR

(3) Send the Department your school's erroneousdata appeal."

If your school is simultaneously submitting both an erroneous dataappeal and an improper loan servicing appeal," they are due bythe later of:

o within 5 working days from receiving all responses to theschool's list of alleged errors from all guaranty agenciesand/or the Direct Loan servicer,

OR

o within 30 calendar days from receiving all responses to theschool's request for loan servicing records from all guarantyagencies.

14. 34 CFR § 668.17(c)(8)15. 34 CFR § 668.17(h)(3)(iv)16. 34 CFR § 668.17(c)(1)17. 34 CFR § 668.17(h)(3)(iv)


5 9

Appeals

{NoteIf your school fails to meet any of these regulatory timeframes, the Department will NOT review the appeal.

The Department will send the school and each involved guarantyagency and/or Direct Loan servicer written notification of its appealdecision. The Department's decision is final and no furtheradministrative review is provided.

The chart on the following page summarizes the timeframes forschools to appeal based on allegations of erroneous data.



Co


Erroneous Data Appeal_lime Frames

.. ,

.

When,yOur schoOl receiVes its official lOan'record. detail,. ,repdrt; it inuat. .send all allegations

, Direct Loan servicerof error to the appropriate guarantyand copies of the allegations

agencies/to the Department.

. These rnud. be serit .

within .,

lOworking days... ,.

When a gUarintY agency andlor Direct Loan serV14er reCeives:,

your,schoors riqUest for verification of -error.:.,. . .

: The guaranty agency .and/or

,. Direct Loan servicer,must respond within:15 wOrking,days.. .

-.

When. your schoOl receiVes all of the guaranty aganCies/15it ;, .. . . .. . _ ,-Loan Servicer rei0onses to its reqUesta for verifleation of ,. .

error, it Must: ' '','

(1) notify the bepartment that it has chosen tofrom the erroneous data appeal processOR

(2) submit to the Department an erroneous data

withdraw

appeal.

. .

This action must betaken within

5 working.days:*' .I

* If, however, your school is submitting erroneous data and improper loan servicingappeals simultaneously, the appeals must be submitted within the time frames outlinedon page 54.


61

Appeals

How do prepare and submiit an erroneous dataappesA to the Department?

Step 11. Review your school's official 'cohort default ratenotification letter and this Guide to determine if yourschool is eligible to appeal based on allegations oferroneous data.

Step 2. Compare the official loan record detail report to thelist of challenges your school submitted during thedraft data review process.

O Identify any disputed data remaining from the draftdata review process. This is loan data that a guarantyagency or Direct Loan servicer did NOT agree tochange during the draft data review process that yourschool still believes is incorrect.

O Identify any incorrect new data appearing in yourschool's official loan record,detail report. Whenreviewing new data against your school's records andinformation from outside sources, you might wish toconfirm:

accuracy of the last date of attendance;

accuracy of the date the loan entered repayment;

+ accuracy of the loan default date;

+ that there are no missing, duplicated, canceled, ordischarged loans;

that there is no student whose loan enteredrepayment in the cohort year, according to yourschool's records and outside sources, who wasomitted from the loan record detail report;

AND


62


Refer to the beginning of thissection for a detailed discussionregarding which schools arepligible to appeal based onallegations of erroneous data.

Please see page 47 for a definitionon new data.

"Outside sources" that a schoolwill want to review include, butare not limited to, records oflenders, students, guarantyagencies, the Direct Loan servicer,or other schools where formerstudents enrolled.

Appeals

When submitting a request forverification of error to theguaranty agency and/or DirectLoan servicer, a school mustsubmit both disputed data andnew data, if the school believesthe data is incorrect.

Important: At this time,schools have 10 working daysto act.

For guaranty agency and/orDirect Loan servicer addresses,please see Appendix Al andAppendix B..


that the same student loan was not reported in twodifferent cohort years.

These are some, but not all, errors that might beidentified.

Step 3. Compile a list of alleged errors for each appropriateguaranty agency and/or Direct Loan servicer.

Record all alleged errors using the spreadsheetFY [insert year(s)] Request for Verification of Errorin Official Loan Record Detail Report (on page 67) orits equivalent. Complete a separate spreadsheet foreach guaranty agency or Direct Loan servicer whereyour school alleges data errors.

Step 4. Onitiate an erroneous data appeal.

(A) Within 10 working days" of receiving your school'sofficial loan record detail report, mail the following to theguaranty agencies and/or Direct Loan servicer:

o A letter on your school's letterhead with

+ your school's OPE ID number;

+. the fiscal year to which the request applies;

a statement indicating your school is requestingverification of error;

a signature by your school's President/CEO/Owner, followed by a signature block providingthe signer's name and job title;

AND

+ a notation that a copy will be sent to theDepartment at the same time.

(See sample letter FY [insert year(s)] Request forVerification of Error in Official Loan RecordDetail Report located on page 64.)

18. 34 CFR § 668.17(c)(8)(i)

63

FY 1996 Official Cohoif Default Rate Guide


The spreadsheet completed in Step 3.

° A copy of relevant pages from the relevant loanrecord detail report.

Include the page of the loan record detailreport where the borrower appears, or wherethe borrower should appear. Provide bothpages of the loan record detail report if theborrower belongs at the end of one page orat the beginning of the next page.

If the borrower is being moved from one yearto another, include the page of the loanrecord detail report where the borrowercurrently appears, and the page of the loanrecord detail report where the borrowershould appear.

If the allegation is based on new data, yourschool should include the draft loan recorddetail report along with the official loan recorddetail report so that the guaranty agency and/or Direct Loan servicer can verify that thedata is actually new data.

Relevant supporting documentation.

AND

(B) ALSO within 10 working days19, of receiving yourschool's official loan record detail report, mail thefollowing to the Department:

A copy of every request for verification of error sentto a guaranty agency or Direct Loan servicer.

AND

o A copy of every completed spreadsheet sent toevery guaranty agency and/or Direct Loan servicer.

19. 34 CFR § 668.17(c)(8)(ii)


6 4


Your school does NOT need tosend loan record detail reportsor supporting documentation tothe Department at this time.


Q. My school initiatederroneous data appeals withthree guaranty agencies, butit only wants to appeal theresponses of two guarantyagencies to the Department.How does my school dothis?

A.. Your school's appealshould include allegations oferror that your schoolchooses to appeal in thiscase, the responses from twoguaranty agencies -- in asingle binder.


[7ote If your school does not meet these 10-working-daytime frames, the guaranty agency and/or Direct Loanservicer will not review your allegations, and theDepartment will not review your list of alleged errors.This means your school will NOT beeligible to continuewith the.erroneous data appeal process.

Step 5. Review the response from a guaranty agency and/orDirect Loan servicer and decide how to proceed.

Review the responses from ALL guaranty agenciesand/or the Direct Loan servicer. Decide if your school'wants to:

withdrawfrom

OR

continue with

the erroneous data appeal process.

Step 6. Tell the Department whether your school iswithdrawing from the appeal process or continuingwith the appeal process.

o If your school wants to withdraw its erroneous dataappeal, within 5 working days of receiving ALLguaranty agency and/or Direct Loan servicer responsesto your school's allegations of error, notify theDepartment that your school is withdrawing itserroneous data appeal. (See page 167 on how towithdraw an appeal.)

OR

o If your school wants to continue with the erroneousdata appeal process, within 5 working days ofreceiving ALL guaranty agency and/or Direct Loanservicer responses:

FY 1996 Official Conon Default Rate Guide

6 5

Appeals

appeal disputed and incorrect nevi data fromeach of the relevant guaranty agencies and/orthe Direct Loan servicer to the Department inan erroneous data appeal.2° (See Step 7 fordetails.)

OR

choose to submit the erroneous data appealwith the loan servicing appeal.2'

If your school is submitting both an erroneous dataappeal and an improper loan servicing appeal, itmay submit the two simultaneously based on timeframes outlined on page 54.

Step 7. Submit the erroneous data appeal to the Department.

o The Department recommends that your school submitits properly completed erroneous data appeal relating todisputed and incorrect new data from each of therelevant guaranty agencies and/orthe Direct Loanservicer for all relevant fiscal years to the Department ina single, tabbed binder, and mail it return receiptrequested or via overnight courier delivery.

The recommended tabs and materials are shown on thenext page.

20. 34 CFR § 668.17(c)(1)21. 34 CFR § 668.17(h)(3)(iv)


A properly completederroneous data appealsubmitted to the Departmentmust include ALL allegations oferror a school is appealing forALL guaranty agencies and/orthe Direct Loan servicer forALL fiscal years.


66

Appeals

Schools only need to send acopy of the cover letter of theappeal to the relevant guarantyagencies and/orDirect Edamservicer at this time. It is notnecessary to send the entireappeal to the guaranty agencyor Direct Loan servicer.

Schools do NOT need to submitcopies of their loan record detailreports to the Department.


The section behind Tab 1 contains:O A letter on your school's letterhead with


a statement indicating that your school is submitting anerroneous data appeal;

the fiscal year(s) to which the appeal applies;

a certification sentence that indicates that the informationprovided in the appeal, under penalty of perjury, is true andcorrect. See 34 CFR Section 668.17(c)(6).

a signature by your school's President/CEO/Owner, followed by asignature block providing the signer's name and job title;

Tab: 1. I

AND

+ a notation that a copy of the appeal letter will be sent to therelevant guaranty agency (or agencies) and/or Direct Loanservicer.

(See sample letter Appeal on FY [insert year(s)] Allegations ofErroneous Data in Official Loan Record Detail Report, on page65.)

The section behind Tab 2 contains: I Tab 2

copies of all relevant correspondence, including:

(1) the guaranty agency's and/or Direct Loan servicer's response(s)to your school's list of alleged data errors in the official cohortdefault rate

AND/OR

(2) the guaranty agency's and/or Direct Loan servicer's response(s)to your school's list of alleged errors in the draft data. (This isnot required when all allegations of error are based on incorrectnew data.)

The section behind Tab 3 contains: Tab.3;

O a list of your school's alleged data errors in the official cohort defaultrate relating to ALL relevant guaranty agencies and/or Direct Loanservicer for ALL relevant fiscal years.

(Use spreadsheet FY [insert year(s)] Appeal on Allegations ofErroneous Data in Official Loan Record Detail Report, on page69, or its equivalent.)

The section behind Tab 4 contains:0 documentation to support your school's list of alleged errors.

Taly4

6 7


Appeals

If sent by commercial overnight mail/courier delivery, send yourschool's erroneous data appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Erroneous Data AppealsROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service, send your school's erroneousdata appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Erroneous Data AppealsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the information submitted in theerroneous data appeal and will not consider information submittedafter the regulatory deadlines. The Department will send the schooland each involved guaranty agency and/or Direct Loan servicer writtennotification of its decision. The Department's decision is final andno further administrative review is provided.

FY 1996 Official Cohort Default Rate Guide 6 3



The Department recommendssending all correspondence returnreceipt requested or viacommercial overnight mail courierdelivery.

The Department acceptsdeliveries from commercialcouriers and/or hand deliveriesMonday through Friday, 8:00a.ntto413Gjm (EasternTime).


Our ToWn A&M UpiVer'Sity1212 Bell Lane'Leonardtown, Wisconsin 1234576789(123) 456-7890

Sample Letter

November 6, 1998

State Guaranty AgencyATTN: Compliance Officer1010 Maple Lane, Suite 200Woodston, Michigan 98765-4321

OPE [insert OPE IDIt]

Subject: FY [insert year(s)] Request for Verification of Error in OfficialLoan Record Detail Report


Our Town A&M University, OPE ID # [insert OPE ION, is requesting verification of theattached errors in its official loan record detail report for FY [insert year(s)].

. Sincerely,

DoeJohn Doe, PresidentOur To.wn A&M University

Enclosure

: U.S. Department of Education

6 9



Our Town niversity1212 'Bell, CaneLeonardtdwn, Wisairisin(123) 456-7690

December 5, 1998

12345-6789

SampBe Ltter

U.S. Department Of Eduaation: ;'DefaultManagementDivision ,

ATTN: Erroneous Data APpealsRoOm 3905,, ,

600=IndependenceAVenue,SWWashington, DC:' 20202-5353

OPE ID#: [insert OPE ID11]

Subject: Appeal on FY [insert year(s)] Allegations ofErroneous Data in Official Loan Record Detail Report

To Whom It MayConcern:3

- - Our Town A&M University, OPE ID# [inSert OPE ID#], is submitting theattached:apPe:al based on allegations of erroneous data in its FY [insertyear(s)] official cohort defaulfrate(a) .

I, the undersigned, certify under penaltyof perjury, that all informationsubmitted in support of the erroneous data appeal is true and correct.

.Sincerely,

Sohn DOe, PresidentOur Town A&M University

:EnclbsureS

; cc: State GuarantyAgetncyDirect Loan Seevicer

FY 1996 Official Cohort Default Rate Guide70

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adsh

eet i

sse

nt to

the

rele

vant

gua

rant

y ag

ency

and

/or

Dire

ct L

oan

serv

icer

.

ote

Fill

out

a s

epar

ate

spre

adsh

eet f

or e

ach

guar

anty

agen

cy o

r D

irect

Loa

n se

rvic

er.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e (h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.

Hea

der:

Ent

er F

Y [i

nser

t yea

r(s)

] Req

uest

for

Ver

ifica

tion

of E

rror

in O

ffici

al L

oan

Rec

ord

Det

ail R

epor

t in

the

cent

er o

f the

hea

der

area

. In

the

left-

hand

are

a,en

ter

your

sch

ool's

nam

e, y

our

scho

ol's

OP

E ID

--nu

mbe

r, a

nd th

e gu

aran

ty a

genc

y or

Dire

ct L

oan

serv

icer

nam

e.

Foo

ter:

Ent

er th

e da

te th

e ap

peal

was

pre

pare

d in

the

left

side

of t

he fo

oter

are

a. S

et u

p au

tom

atic

pag

inat

ion

in th

e rig

ht s

ide

of th

e fo

oter

are

a so

that

the

spec

ific

page

num

ber

and

the

tota

l num

ber

of p

ages

sho

w o

nea

ch p

age

(exa

mpl

e: p

age

1 of

10

page

s).

The

gua

rant

y ag

ency

/Dire

ct L

oan

Ser

vice

r w

ill o

nly

Not

ere

view

the

alle

gatio

ns li

sted

on

the

scho

ol's

spre

adsh

eet t

o th

e gu

aran

ty a

genc

y/D

irect

Loa

nse

rvic

er.

On

Row

1, e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

ly th

esa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

2 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

ch a

llege

d er

ror.

Col

umn

1:E

nter

the

borr

ower

's S

ocia

l Sec

urity

num

ber

(SS

N)

usin

g hy

phen

s to

sep

arat

e th

e nu

mbe

rs (

exam

ple:

000-

88-0

000)

. If m

ore

than

one

SS

N is

list

ed, s

ort

by n

umer

ical

ord

er w

hen

read

y to

prin

t the

spre

adsh

eet.

Col

umn

2:E

nter

the

borr

ower

's n

ame.

Col

umn

3:E

nter

Dis

pute

d (D

ispu

ted

Dat

a) o

r N

ew (

New

Dat

a)to

iden

tify

if er

rors

are

alle

ged

on th

e ba

sis

ofun

reso

lved

dat

a fr

om th

e dr

aft d

ata

revi

ew p

roce

ss o

rin

corr

ect n

ew d

ata.

Col

umn

4:

Col

umn

5:

Col

umn

6:

Col

umn

7:

Col

umn

8:

Col

umn

9:

Col

umn

10:

Col

umn

11:

Col

umn

12:

Col

umn

13:

Ent

er th

e lo

an ty

pe. U

se F

FE

US

F (

Fed

eral

Fam

ily.

Edu

catio

n Lo

an/S

taffo

rd),

DU

SF

(D

irect

Loa

n/S

taffo

rd),

or

SLS

(S

uppl

emen

tal L

oans

for

Stu

dent

s)to

iden

tify

the

type

of l

oan.

Use

X to

iden

tify

whe

ther

an

SLS

rep

aym

ent d

ate

need

s to

be

linke

d to

an

FF

EL/

Sta

fford

rep

aym

ent

date

. If l

inka

ge is

not

app

licab

le, l

eave

bla

nk.

Ent

er M

M/D

D/Y

YY

Y (

mon

th, d

ay, a

nd y

ear)

toid

entif

y th

e B

CD

(be

ginn

ing

clas

s da

te)

of th

e lo

anpe

riod.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

the

EC

D (

endi

ng c

lass

date

) of

the

loan

per

iod.

Ent

er M

M/P

D/Y

YY

Y to

iden

tify

the

LGD

(lo

angu

aran

ty d

ate)

.

Ent

er th

e ea

rlier

dat

e of

the

borr

ower

's L

DA

(la

st d

ayof

atte

ndan

ce)

or th

e LT

H (

less

than

hal

f tim

e) d

ate

acco

rdin

g to

you

r sc

hool

's r

ecor

ds a

nd o

utsi

deso

urce

s.

Ent

er M

M/D

D/Y

YY

Y o

r M

M/Y

YY

Y to

iden

tify

the

DE

R(d

ate

the

loan

ent

ered

rep

aym

ent)

acc

ordi

ng to

you

rsc

hool

's r

ecor

ds a

nd o

utsi

de s

ourc

es.

Ent

er M

M/D

D/Y

YY

Y o

r M

M/Y

YY

Y to

iden

tify

the

CP

D(c

laim

pai

d da

te),

DD

(de

faul

t dat

e), o

r IC

RD

(In

com

eC

ontin

gent

Rep

aym

ent d

ate)

acc

ordi

ng to

you

rsc

hool

's r

ecor

ds a

nd o

utsi

de s

ourc

es. E

nter

N/A

ifth

e st

uden

t did

not

def

ault.

Ent

er th

e fis

cal y

ear(

s) to

whi

ch y

our

scho

ol w

ould

like

to s

ee th

is in

form

atio

n ap

plie

d.

Ent

er N

(nu

mer

ator

), D

(de

nom

inat

or),

or

B (

both

num

erat

or a

nd d

enom

inat

or),

acc

ompa

nied

by

a pl

usor

min

us s

ign

(suc

h as

+D

or

-D)

to s

how

how

you

rsc

hool

bel

ieve

s th

e in

form

atio

n w

ill a

ffect

its

offic

ial

CD

R (

coho

rt d

efau

lt ra

te)

calc

ulat

ion.

7 2

a

Sch

ool N

ame

OP

E ID

Num

ber

Gua

rant

y A

genc

y or

Dire

ct L

oan

serv

icer

Nam

e

FY

[ins

ert y

ear(

s)]

Req

uest

for

Ver

ifica

tion

of E

rror

in O

ffici

al L

oan

Rec

ord

Det

ail R

epor

t1.

Bor

row

ers

SS

N

(sor

t in

num

eric

al o

rder

)

2. B

orro

wer

sna

me

3. B

asis

of

alle

ged

erro

r

(Dis

pute

d or

New

)

4. T

ype

oflo

an

(FF

EL/

SF

DU

SF

or S

LS)

6. L

ink

SLS

toF

FE

US

F

(X d

r

leav

e bl

ank)

6. B

egin

ning

clas

s da

te

(BC

D)

(MM

/DD

NY

YY

)

7. E

ndin

gcl

ass

date

(EC

D)

(MM

/DD

/YY

YY

)

8. L

oan

guar

anty

dat

e

(LG

D)

(MM

/DD

/YY

YY

)

9. E

arlie

rof

LD

A

or L

TH

(MM

/DD

NY

YY

)

10. D

ate

ente

red

'

repa

ymen

t

(DE

R)

(MM

/DO

NY

YY

or M

MN

YY

Y)

11. C

PD

,

DD

, IC

RD

,

or N

/A

(MM

/DD

/YY

YY

or M

MN

YY

Y)

12. F

Y(s

)

appl

.

13. E

ffect

on

CD

R

calc

.

(N, 0

,

or B

)

-000

-88-

0000

-

..

John

J. D

oe I

Dis

pute

dF

FE

L/S

F9/

1/19

95.

.--

12/1

2/19

959/

1/19

95'9

/2/1

995

3/2/

1996

N/A

FY

199

5F

Y 1

996.

. +

Not

e: T

his

is a

sim

ple

spre

adsh

eet.

See

inst

ruct

ions

.

MM

/DD

/YY

YY

73(s

end

to G

uara

nty

Age

ncy/

Dire

ct L

oan

Ser

vice

rl

,T 2 8 -0 13

Pag

eof

page

s

74

App

eaH

ngff

iron

sous

, Dat

aH

ow to

fill

out

FY

Ein

sert

yea

r(s)

] A

ppea

l on

Alle

gatio

ns o

f E

rron

eous

Dat

a in

Off

icia

l Loa

nR

ecor

d D

etai

l Rep

ort s

prea

dshe

et

Rec

ord

all l

oans

bei

ng a

ppea

led

to th

e U

.S. D

epar

tmen

t of E

duca

tion

(the

Dep

artm

ent)

usi

ng a

spr

eads

heet

sof

twar

e ap

plic

atio

n su

ch a

s Lo

tus

1-2-

3,S

uper

calc

, or

Exc

el. T

he r

esul

ting

spre

adsh

eet i

s se

nt to

the

Dep

artm

ent.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e(h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.

Hea

der:

Ent

er F

Y [i

nser

t yea

r(s)

] App

eal o

n A

llega

tions

of

Err

oneo

us D

ata

in O

ffici

al L

oan

Rec

ord

Det

ail R

epor

t in

the

cent

er o

f the

hea

der

area

.In

the

left-

hand

are

a, e

nter

your

sch

ool's

nam

e an

d Y

our

scho

ol's

OP

E ID

num

ber.

Foo

ter:

Ent

er th

e da

te th

e ap

peal

was

pre

pare

d in

the

left

side

of

the

foot

er a

rea.

Set

up

auto

mat

ic p

agin

atio

n in

the

right

side

of t

he fo

ot&

are

a so

that

the

spec

ific

page

num

ber

and

the

tota

l num

ber

of p

ages

sho

w o

n ea

ch p

age

(exa

mpl

e: p

age

1 of

10

page

s).

Sor

t:T

he b

orro

wer

s lis

ted

on th

e sp

read

shee

t sho

uld

be s

orte

dby

:1.

Gua

rant

y ag

ency

and

/or

Dire

ct L

oan

serv

icer

cod

e2.

Bor

row

er's

soc

ial s

ecur

ity n

umbe

r

1-11

ote

The

Dep

artm

ent w

ill o

nly

revi

ew th

e al

lega

tions

list

ed o

nth

e sc

hool

's s

prea

dshe

et to

the

Dep

artm

ent.

On

Row

1, e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

ly th

e sa

me

orde

ras

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

2 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

ch lo

an w

here

ther

e is

an a

llege

d er

ror.

Rem

embe

r in

put d

ates

bas

ed o

n yo

ur s

choo

l's r

ecor

ds. D

o N

OT

incl

ude

date

s ba

sed

on th

e lo

an r

ecor

d de

tail

repo

rt o

r gu

aran

ty a

genc

y an

d/or

Dire

ct L

oan

serv

icer

info

rmat

ion

if yo

u be

lieve

thos

e da

tes

are

inco

rrec

t.

Col

umn

1:

Col

umn

2:

Ent

er th

e bo

rrow

er's

Soc

ial S

ecur

ity n

umbe

r (S

SN

) us

ing

hyph

ens

to s

epar

ate

the

num

bers

(ex

ampl

e:00

0-88

-000

0).

Ent

er th

e bo

rrow

er's

nam

e.

Col

umn

3:E

nter

Dis

pute

d (D

ispu

ted

Dat

a) o

r N

ew (

New

Dat

a) to

iden

tify

if er

rors

are

alle

ged

on th

e ba

sis

of u

nres

olve

dda

ta fr

om th

e dr

aft d

ata

revi

ew p

roce

ss o

r in

corr

ect n

ewda

ta.

Col

umn

4:E

nter

the

loan

type

. Use

FF

EU

SF

(F

eder

al F

amily

Edu

catio

n Lo

an/S

taffo

rd),

DL/

SF

(D

irect

Loa

n/S

taffo

rd),

or

SLS

(S

uppl

emen

tal L

oans

for

Stu

dent

s) to

iden

tify

the

type

of lo

an.

Col

umn

:U

se X

to id

entif

y w

heth

er a

n S

LS r

epay

men

t dat

e ne

eds

tobe

link

ed to

an

FF

EU

SF

rep

aym

ent d

ate.

If lin

kage

is n

otap

plic

able

, lea

ve b

lank

.

Col

umn

6:E

nter

MM

/DD

/YY

YY

(m

onth

, day

, and

yea

r) to

iden

tify

the

BC

D (

begi

nnin

g cl

ass

date

) of

the

loan

per

iod.

Col

umn

7:E

nter

MM

/DD

/YY

YY

to id

entif

y th

e E

CD

(en

ding

cla

ss d

ate)

of th

e lo

an p

erio

d.

Col

umn

8:E

nter

MM

/DD

/YY

YY

to id

entif

y th

e LG

D (

loan

gua

rant

y da

te).

Col

umn

9:E

nter

the

earli

er d

ate

of th

e bo

rrow

er's

LD

A (

last

day

of

atte

ndan

ce)

or th

e LT

H (

less

than

hal

f tim

e) d

ate

acco

rdin

g to

you

r sc

hool

's r

ecor

ds a

nd o

utsi

de s

ourc

es.

Col

umn

10:

Ent

er M

M/D

D/Y

YY

Y o

r M

M/Y

YY

Y to

iden

tify

the

DE

R (

date

the

loan

ent

ered

rep

aym

ent)

acc

ordi

ng to

you

r sc

hool

'sre

cord

s an

d ou

tsid

e so

urce

s.

Col

umn

11:

Ent

erth

e M

M/D

D/Y

YY

Y o

r M

M/Y

YY

Yto

iden

tify

the

CP

D(c

laim

pai

d da

te),

DD

(de

faul

t dat

e), o

r IC

RD

(In

com

eC

ontin

gent

Rep

aym

ent d

ate)

acc

ordi

ng to

you

r sc

hool

'sre

cord

s an

d ou

tsid

e so

urce

s. E

nter

N/A

if th

e st

uden

t did

not d

efau

lt.

Col

umn

12:

Ent

er th

e fis

cal y

ear(

s) to

whi

ch y

our

scho

ol w

ould

like

tose

e th

is in

form

atio

n ap

plie

d.

Col

umn

13:

Ent

er N

(nu

mer

ator

), D

(de

nom

inat

or),

or

B (

both

num

erat

or a

nd d

enom

inat

or),

acc

ompa

nied

by

a pl

us o

rm

inus

sig

n (s

uch

as +

D o

r -D

) to

sho

w h

ow y

our

scho

olg

belie

ves

the

info

rmat

ion

will

affe

ct it

s of

ficia

l CD

R (

coho

rt(1

)0

defa

ult r

ate)

cal

cula

tion.

Ent

er th

e gu

aran

ty a

genc

y an

d/or

Dire

ct L

oan

serv

icer

code

. Thi

s co

de c

an b

e fo

und

in A

ppen

dice

s A

and

B.

°co

Col

umn

14:

.13

.13

Sch

ool N

ame

OP

E.ID

Num

ber

FY

[ins

ert y

ear(

s)]

App

eal o

n A

llega

tions

of E

rron

eous

Dat

ain

Offi

cial

Loa

n R

ecor

d D

etai

l Rep

ort

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.)

1. B

orro

wee

sS

SN

2. B

orro

wee

sna

me

3. B

asis

of

alle

ged

erro

r

(Dis

pute

d or

New

)

4. T

ype

oflo

an

(FF

EL/

SF

DLI

SF

or S

LS)

6. L

ink

SLS

toF

FE

L/S

F

(X o

r

leav

e bl

ank)

6. B

egin

ning

clas

s da

te

(BC

D)

(MM

/DD

AN

YY

)

7. E

ndin

gcl

ass

date

(EC

D)

mm

arer

ro

8. L

oan

guar

anty

dat

e

(LG

D)

(MM

/DD

NY

YY

)

9. E

arlie

rof

LD

A

or L

TH

(MM

/DD

/YY

YY

)

10. D

ate

ente

red

repa

ymen

t

(DE

R)

(MM

/DD

NY

YY

or M

M/Y

YY

Y)

11. C

PD

,

DD

, IC

RD

,

or N

/A

(MM

IDD

AN

YY

or M

MN

YY

Y)

12. F

Y(s

)

appl

.

13. E

ffect

on CD

R

calc

.

(N, D

,

or B

)

14. G

A

and/

or

Dire

ct

Loan

num

ber

000-

88-0

000

John

J. D

o6D

ispu

ted

FF

EL/

SF

9/1/

1995

12/1

2/19

959/

1/19

959/

2/19

953/

2/19

96'N

/AF

Y 1

995

FY

199

6..:

'-D

,."

D '.

...

-11

1" '

-0 .,

7 7

,. z .M

M/D

D/Y

YY

Yco

[sen

d to

U.S

. Dep

artm

ent o

f Edu

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andLoam SeMchgscYlon Appes.

If your school's FY 1996 official cohort default rate is equal to orgreater than 20.0 percent AND it believes that one or more defaultedFFEL Program loans included in its official cohort default ratecalculation did not receive loan servicing activities specified in 34CFR § 668.17(h), your school may be eligible to file an appealalleging improper loan servicing and collection.'

As this publication goes to press, an improper loanservicing appeal may NOT be filed based on William D.Ford Direct Loan Program loans (Direct Loans).However, the Department is considering a process thatwould allow improper loan servicing and collectionappeals based on Direct Loans. If the process isimplemented prior to the release of the FY 1996 officialcohort default rates, the Default Management Divisionwill provide guidance and instructions to schools on howto appeal Direct Loans based on improper loanservicing and collection.

What is an improper Doan servicing andcollection appeaD?

An improper loan servicing and collection appeal is a challengesubmitted to the Department alleging that a school's official cohortdefault rate includes loans on which the borrower did not make apayment and the lender failed to perform loan collection activities,specified in 34 CFR § 668.17(h).

A school does NOT have to besubject to sanctions to submitan appeal on the basis ofimproper loan servicing, butyour school's official cohortdefault rate must be at least 20.0percent.

1. HEA Section 435(a)(3) and 34 CFR § 668.17(h)(1)


7g

Appeals Improper Loan Servicing and Collection Appeal

The shortened term "improper loan servicing" is often used to refer to"improper loan servicing and collection" for the remainder of thissection and throughoutthis guide.

Mien a defauDted FFEL Program [loanconskfered h'mpropeuty serviced for cohortdefauK rate purposes?

A defaulted FFEL Program loan is considered to have been due toimproper loan servicing2 if:

o the borrower never made a payment

AND

o the school can document that the lender failed to perform oneor more of the following activities:

send at least one letter (other than the final demand letter)urging the borrower or endorser to make paymentson theloan (if the lender was required to send such letters);

attempt at least one telephone call to the borrowerorendorser (if such attempts were required);

+ submit a request for pre-claims assistance to the guarantyagency (if such a request was required);

send a final demand letter to the borrower (if required);

AND/OR

+ submit a certification (or other evidence) that skip tracingwas performed (if required).

ONLY allegations regarding the above informationwillbe accepted as the basis of an improper loan servicingappeal.

2. 34 CFR § 668.17(h)(3)(viii)


80


Example 1 : The following is an example of a properly servicedloan.

The loan servicing record for Sarah Watson's(SSN# 055-00-0000) Stafford loan indicates that acollection letter regarding the Stafford loan was mailedto Sarah by the lender on November 11, 1996. Inaddition, the lender attempted to contact Sarah bytelephone on January 14, 1997. Finally, the loanservicing record indicates that a pre-claims assistancerequest was sent by the lender to the guaranty agency onApril 15, 1997 and a final demand letter was mailed toSarah on July 15, 1997. This loan is consideredproperly serviced because the required elementsidentified in 34 C.F.R. Section 668.17(h)(3)(viii) wereconducted and the record did not show any evidencethat the borrower's address was incorrect.

This account should NOT be included in your school'sappeal based on allegations of improper loan servicing.

Example 2: The following is an example of an improperly servicedloan.

The loan servicing record for Jonas Doe's (SSN #444-44-4444) SLS loan shows that a collection letterregarding the SLS loan was mailed to Jonas by thelender on December 8, 1996. In addition, the loanservicing record indicates that the lender attempted tocontact Jonas by telephone on January 6, 1997 and apre-claims assistance request was sent by the lender tothe guaranty agency on May 16, 1997. There is noevidence in the loan servicing record that the lender senta final demand letter to Jonas, that Jonas made apayment on the loan, or that the lender received anyinformation that the borrower's address was incorrect.Therefore, this loan is considered improperly servicedbecause all of the required elements identified in 34C.F.R. Section 668.17(h)(3)(viii) were not conducted.

This account should be included in your school's appealbased on allegations of improper loan servicing.

For cohort default ratepurposes, a properly servicedFFEL Program loan is onewhere the borrower made apayment, all fourelements aremet, or the lender certified thatskip tracing was performed (ifrequired). Do.NOT includeproperly serviced loans inyour appeal to theDepartment.


0 1

AppealsImproper Loan Setvicing and Collection Appeal

Example 3: The following is an example of a borrower with multipleloans.

Susie Smith (SSN # 888-88-8888) has multiple studentloans in the FY 1996 cohort rate. The loan record detailreport and the loan servicing records show that Susiehad two subsidized Stafford loans that defaulted andone unsubsidized Stafford loan that defaulted. Thelender/guaranty agency serviced the two subsidizedloans together. The loan servicing records for thesubsidized loans indicate that collection letters andphone call attempts were made by the lender. Inaddition, the lender requested pre-claims assistancefrom the guaranty agency and sent a final demand letterto the borrower. These loans are considered properlyserviced and should NOT be included in your school'sloan servicing appeal based on allegations of improperloan servicing.

The unsubsidized Stafford was serviced separatelyfrom the subsidized Stafford loans, with different datesfor the phone calls, letters, and request for pre-claimsassistance from the lender to the guarantyagency.However, there is no evidence in the loan servicingrecord that a final demand letter date was sentregarding the unsubsidized Stafford loan. In addition,there is no evidence thata payment was made on theloan or that the lender received any information that theborrower's address was incorrect. Therefore, this loanis considered improperly serviced.

Your school should only submitthe unsubsidizedStafford loan as part of its appeal based on allegationsof improper loan servicing.

What [iMfollvecr_ hl skip traciing?

Skip tracing is required when the lender receives informationindicating that the borrower's address of record is incorrect.

The lender must either:

certify that skip tracing was performed

OR


82


perform at least one of the following

attempt to contact the endorser,

attempt to contact the borrower's relatives,

attempt to contact the borrower's references,

attempt to contact the borrower, endorser, orreferences using telephone directory assistance,

attempt to contact any individual and any entities in

the borrower's loan file,

OR

perform any other normal skip tracing activity.

Skip tracing is NOT required if:Mote 1) the lender receives information regarding an

incorrect address after 151 days of the borrowerbecoming delinquentOR

2) the lender does not have a record of the borrower'scorrect telephone number.

Example 4: The following is an example of a loan requiringskip tracing.

The loan servicing record for Ralph Bosco (SSN #111-11-1111) shows that numerous letters were mailedto Ralph, and all the letters were returned with noforwarding address. The lender was unable to contactRalph by telephone and all calls to the references listedon Ralph's loan application and to Ralph's school didnot yield a new or forwarding address for Ralph. Thelender's calls to directory assistance, the motor vehicledepartment, and the credit bureau were not successfulin finding a current address for Ralph. A final demandletter was not sent to Ralph, because an updatedaddress could not be obtained. In addition, Ralph didnot make any payments on his loan. However, becausethe lender conducted at least one skip tracing activity onthis account, it is considered a properly serviced loan.

This account should NOT be included in the school'sloan servicing appeal based on allegations of improperloan servicing.


8 3

AppealsImproper Loan Servicing and Collection Appeal

Does my schooi have to be subject tosanctions to submit an improper ioan servicingappear?

No, your school does not have to be subject to sanctions; however, itmust have an FY 1996 official cohort default rate that is equal to orgreaterthan 20.0 percent.3

is my schod elligibie to Me an improper iloanservisaing appear?

A school may file an improper loan servicing appeal if it candemonstrate that there was improper loan servicing as defined in34 CFR § 668.17(h) for any of the loans included in the cohort defaultrate calculation AND its FY 1996 official cohort default rate is equal toor greater than 20.0 percent.

This checklist summarizes the criteria for an improper loan servicingappeal. Review the checklist todetermine if your school can appealon the basis of improper loan servicing and collection.

Mwroper _oan SeMchgApp ty Checkflat

To be eligible to appeal its official cohort default rate on the basis ofimproper loan servicing, your school must meet ALL of the followingcriteria:

0 your school's official cohort default rate is equal to or greaterthan 20.0 percent

AND

U after reviewing loan servicing records from guarantyagencies, your school believes that defaults on certain FFELProgram loans were due to improper loan servicing asdescribed in 34 CFR § 668.17(h)(3)(viii)

AND

U your school has NOT previously appealed the official cohortdefault rate at issue on the basisof improper loan servicing.

3. 34 CFR § 668.17(h)(1)


8 4


Whiich cohort degauft rates may my schooflappearThe sanctions your school is subject to determine which cohort defaultrates your school may appeal on the basis of improper loan servicing.

If your school is NOT subject to sanctions, but has an FY1996 official cohort default rate equal to or greater than 20.0percent, it may ONLY appeal its FY 1996 official cohort defaultrate on the grounds that improperly serviced loans were used

in the calculation.

o If your school is subject to initial loss of FIFEL Program and/or Direct Loan Program eligibility, it may appeal any or allof the three most recent official cohort default rates on whichthe loss would be basedas long as your school has notpreviously challenged that fiscal year's official cohort defaultrate on the basis of improper loan servicing. This year yourschool may appeal its FY 1994, FY 1995, and/or FY 1996

official cohort default rates.

o If your school is subject to extended Boss of FFEL Programand/or Direct Loan Program eligibility, it may appealONLY the most recent year's (FY 1996's) official cohort

default rate.

o If your school is subject to possible action to LS&T itseligibility to participate in all Title DV federal studentfinancial assistance programs due to its FY 1996 officialcohort default rate, but it is NOT subject to initial loss of FFELProgram and/or Direct Loan Program participation, it mayappeal ONLY the FY 1996 official cohort default rate.

FY 1996 Official Cohort Default Rate Guide8 5

Please see page 17 foradditional information onsanctions.

A school may appeal a specificfiscal year cohort default rateonly once on the basis ofimproper loan servicing.

Page 77


If your school received arepresentative sample of loanservicing records and theDepartment determines thatsome of the loans included inthe sample were improperlyserviced. the Department willextrapolate the results of thereview over the entirepopulation of defaultedaccounts included in the cohortdefault rate calculation for therelevant guaranty agencies.

The table below summarizes the official cohort default rates that your fischool may appeal on the basis of improper loan servicing.

Officllall Cohort neffauilt Rates That MayBe Appealed on the Bas Eis of [Improper

Loan SeMsdng

# liouiSchOol, is Subjact to ..., ,,Yotir sChool inay...-,,

No sanctions and has anFY 1996 official cohort default ratebelow 20.0 percent

NOT appeal

No sanctions but has anFY: 1996 offiCiatdohort 'default rate

, equil to orabove 20 0 perceni

-, appealTY,1996,

Initial FFEUDirect Loan Program loss appeal FY i 994,* FY 1995,*and FY 1996

, itXtended FFEL/bi4ci LOa'n*-PrOgrafrloss'

. apOeal ,111' 199,6

LS&T only appeal FY 1996

* Provided that your school has not previously appealed the cohort default rate onthe basis of improper loan servicing.

How can a successM uTiproper °Dan servcringappeal° affect my schooPs offida cohort defaa.dtrate?If, as a result of an improper loan servicing appeal, the Departmentdetermines that a loan (or loans) should be removed from yourschool's official cohort default rate calculation, the Departmentremoves the improperly serviced loan (or loans) from the numeratorand the denominator ofyour school's official cohort default ratecalculation and recalculates the rate using the corrected data. Doingso generally lowers your school's official cohort default rate. (Theofficial cohort default rate calculation is explained on page 7.)


R 11


What role does a guarmty agency have nn myschool's nmproper loan servncing appeal to theDepartment?At your school's request, a guaranty agency must provide arepresentative sample of loan servicing records on defaulted studentloans that it guaranteed and that were included in your school's

applicable cohort default rate.4

Your school can expect to receive a response to its request for loanservicing records according to the time frames that follow.

What are the time frames and. procedures forinitnathlg an mproper loan servncnng appeal?

Timing is critical when appealing an official cohortdefault rate on the

basis of improper loan servicing. Departmentregulations establishthe following time frames:

o Within 10 working days5 of receiving its official cohort defaultrate and official loan record detail report, yourschool must

+ review your official cohort default rate notification letter,

AND

submit a request for loan servicing records (see sampleletter Request for FY [insert year(s)] RepresentativeSample of Loan Servicing Records, on page 94) to therelevant guaranty agency (or agencies),

AND

submit copies of the relevant loan record detail report(s) tothe relevant guaranty agency (or agencies),

AND

4:0 simultaneously send the Department copies of therequest letters sent to the relevant guaranty agency (oragencies).

If a guaranty agency's responseis late, notify the Departmentin writing, of the delay.

A delayed response from aguaranty agency does NOTjeopardize your school'sappeal, provided- your schooltimely requestetdiesampleand notified the Department.

Important: At this point,schools have 10 workingdays to act.

The representative sainple israndomly selected by theguaranty agency from therelevant loan record detailreport; a school can not selectspecific borrower records.

4. 34 CFR § 668.17(h)(3)(iii)5. 34 CFR § 668.17(h)(3)(ii)


8 7

Appeals

Time frames whenguaranty agencies chargea fee.

If a guaranty. agency charges afee forloarfservieing records,the appeal time framesltre thesame for schools subject tosanctions and fornon-sanctioned schools.

Important At this point,schools have 15 workingdays to act.

Improper Loan Servicing and Collection Appeal

If your school fails to submit the loan record detail reportto a guaranty agency along with its request for loanservicing records, it may lose its right to appeal to theDepartment on the basis of improper loan servicing.

* A guaranty agency may charge a reasonable fee for copyingand providing the documents, not to exceed $10 per borrowerfile6.

Within 15 working days of receiving your school's requestfor loan servicing records, a guaranty agency mustrandomly select the requested representative sample ofdefaulted student loans from those listed in the school'sloan record detail report and bill the school for the records.'

THEN

Within 15 working days of receiving a guaranty agency'sreq uest for payment, your school must submit full paymentto the guaranty agency forthe requested loan servicingrecords.8

THEN

Within 15 working days of receiving full payment fromyour school forthe loan servicing records, the guarantyagency must provide your school with the requested loanservicing records.

A guaranty agency that charges a fee for providingcopies of loan servicing records MUST receive fullpayment from your school within the required timeframe. If not, your school loses its right to challenge thatguaranty agency's loan servicing records. The guarantyagency then notifies both your school and theDepartment, in writing, that your school has lost its rightto appeal student loans guaranteed by that guarantyagency on the basis of improper loan servicing .9

6. 34 CFR § 668.17(h)(3)(iii)(D)7. 34 CFR § 668.17(h)(3)(iii)(F)8. Id.9. Id.


8 8


If the guaranty agency does not charge a processing fee, the

time frames are as follows

Within 15 working days of receiving your school's requestfor loan servicing records, a guaranty agency must provide a

school subject to initial or extended loss of FFELProgram and/or Direct Loan Program eligibility with arepresentative sample of loan servicing records.'°

t:* Within 30 calendar days of receiving your school's requestfor loan servicing records, a guaranty agencymust provide aschool NOT subject to initial or extended loss of FFELProgram and/or Direct Loan Program eligibility with arepresentative sample of loan servicing records."

What are the thine frames and procedures whenthere are miseng and/or MeOblle records hi thesampOe of 'loan servichig records provided bythe guaranty agency?ALL schools, regardless of whether a guaranty agency charges for loan

servicing records, should

* within 5 working days of receiving loan servicing records froma guaranty agency, requestfrom the guaranty agency any loanservicing records identified as being part of the representativesample that were not provided in the actual sample or any loanservicing records required to be provided that were illegible as

provided.

AND

within 5 working days simultaneously send a copyof this

request to the Department.

10. 34 CFR § 668.17(h)(3)(iii)11. Id.

Time frames when guarantyagencies do NOT charge afee.

If your school is only subjectto LS&T of Title IV federalstudent fmancial assistanceprograms, the guarantyagency has 30 calendar daysto provide your school withloan servicing records if theguaranty agency does notcharge a fee.

Important: At this point,schools have 5 workingdays to act.

To determine if any of theselected loan servicing recordsare missing, a school receivinga representative sample ofloan servicing records shouldcross reference, within 5workingilaYi'Otreceipt:oftheloan servicing records, therecords provided by theguaranty agency with the listof borrowers included in thesample as identified by theguaranty agency.

To determine if any of theselected loan servicing recordsare missing, a school receiving atotal population of defaultedloans from a guaranty agencyshould cross reference, within 5working days of receipt of theloan servicing records, therecords provided by theguaranty agency with theguaranty agency's defaultedborrowers listed on the loanrecord detail report.


63

AppealsImproper Loan Servicing and Collection Appeal,

aa: What if the guarantyagency and/or Direct Loanservicet responds7thatit.cannot provide the recordsthat your school identified asmissing or illegible?

.44:: Your school shouldsubmit its loan servicingappeal to the Departmentwithin the required timeframes and indicate that somerecords are missing and/orillegible. Your school shouldalso include a copy of theguarantiagenCy and/or DirectLoan servicer's writtenresponse ihat it cannotprovide the records.

A loan servicing record is not considered missing orillegible if all the necessary elements noted in34 C. F. R. Section 668.17(h)(3)(viii) can be identified.Nor is a loan servicing record considered missing orillegible if collection historydocuments are present andlegible. Therefore, a school may only request additionaldocumentation from the guarantyagency if the loanservicing record in question does not have thenecessary material present to determine if the elementsspecified in 34 C. F. R. Section 668.17(h)(3)(viii) werepresent.

A guaranty agency has:

5 working days to provide your school with missing recordsand/or readable photocopies

AND

o 5 working days to simultaneously send a copy of thisresponse to the Department.

What ars the Valle frames and procedures whena guaranty agency 'undcates that the requestedkAn senacring records cannot be provkledbecause the records are ['mild by theDepartment?If a school receives notification from the guaranty agency that therequested loan servicing records are currently held by theDepartment, the school has 5 working days from receipt of theguaranty agency's letter to submit the request for these records to theDepartment. The school should submit this request to the followingaddress:

U.S. Department of EducationAttn: Cohort Default Rate ProcessingMail Stop 41456201 Interstate Highway 30Greenville, Texas 75402-7419

and simultaneously send a copy to the Department's DefaultManagement Division at the address provided in Appendix C.

Page 82FY 1996 Official Cohort Default Rate Guide80


What are the tOme frames and procedures whena schoo0 receOves ALL Ooan servOcing recordsfrom the Oast guaranty agency?

O Within 30 calendar days of receiving ALL loan servicingrecords from ALL guaranty agencies, including those recordsthat were missing or illegible, which were timely requested,your school must do one of the following:

+ Notify the Department that your school has chosennot to appeal (see page 167 on how to withdraw anappeal).

OR

Choose to submit its improper loan servicing appealwith its erroneous data appeal, provided that theerroneous data appeal was timely initiated."

OR

Send the Department your school's improper loanservicing appeal."

If your school is simultaneously submitting both an improper loanservicing and erroneous data appeal, they are due by thelater of:

o within 30 calendar days from receiving the final response tothe school's request for loan servicing records from the finalguaranty agency (or guaranty agencies)

within 5 working days from receiving the final response to theschool's list of alleged erroneous data from the final guarantyagency (or agencies) and/or the Direct Loan Servicer.

If a school fails to meet ANY of these regulatory timeframes, the Department will not review the appeal.

The Department will send the school and each involved guarantyagency written notification of its final decision on the school'sappeal.The Department's decision is final and no further administrativereview is provided.

12. 34 CFR § 668.17(h)(3)(iv)13. Id.

FY 1996 Official Cohort Default Rate Guide 91

',Important. At this point,schools have 30 calendardays to act. ,

The Department tracks-receipt..ofalfguaranty,agency'responses.

Page 83


The tables that follow summarize the timeframes a guaranty agencyhas to respond to your school when:

* it charges a fee to schools,

o it does NOT charge a fee to schools subject to loss of FFELand/or Direct Loan Program eligibility,

OR

it does NOT charge a fee to schools not subject to the loss ofFFEL and/or Direct Loan Program eligibility.

The first table, on the next page, summarizes the time frames for aguaranty agency that charges a fee to schools.

PageFY 1996 Official Cohort Default Rate Guide

84

0 0J


Improper Loan Servicing AppealTIme Frames

When a Fee is Required., .

WhenlyO0 sChoOl receives itiofficiayloan -reCPrdrdetait report, it Muit:

request a representative sample of loan servicing records from guarantyagencies and send copies of the request letters to the Department.

Requests mustbe madewithin 10 working days..'-

:-Afterreceiving your schaere-reqUeSt-a guaranty agency shobldsend...,the school a list ofrepresentative sampleguaranteed by theservicing records.

randomly selected borrowers who willor the total population of defaulted

agency and a request for full payment

be in theborrowersfor the loan

This must be sentwithin 15 working days

When your school receives a request for payment from-.a guaeantyagency, it must:

send full payment to the guaranty agency.

This must be donewithin 15 working days

iAfter receiVing your school's timely payment, a guaranty agencySends

the school a representativeservicing records

sample or the total population of loanof defaulted borrowers guaranteed by the agency.

This must be donewithin 15 working days

When yOUr school receives the guaranty agency's respOnse to itsrequestior loan servicing reCords, it mUst: L

(1) notify the Department that it has chosen to witTdrawitslinproperloan servicing appealOR

(2) submit to the Department an improper loan servicing appeal.

This must be done Within30 calendar days*

If, however, your school is submitting erroneous data and improper loanservicing appeals simultaneously, the appeals must be submitted within thetime frames outlined on page 83.


9 3

If there are missing and/orillegible records, your schoolhas 5 working days torequest replacement recordsfrom the relevant guarantyagencies upon receipt of theoriginal records from theguaranty agency. Please seethe note on page 82 forclarification on missing andillegible records.

Upon receipt of the schooesrequest, a guaranty agency has5 working days to provide themissing records and/orreadable copies.

Page 85



Upon receipt of the school'arequest, a guaranty agency has5 working days to providelhemissing records and/orreadable copies.

Page 86

The following table summarizes the time frames for schools subjectto the loss of FFEL and/or Direct Loan Program eligibty whena guaranty agency does MOT charge a processing fee.

_

Improper Loan Servicing AppealTime Frames When There is

NO Processing Fee for Schools Subjectto the Loss of FFEL and/or Direct Loan

Program EligibilityWhen your school receives its official loan record detailreport, it must:

1

request a representative sample of loan servicing records fromguaranty agencies and simultaneously send copies of the requestletters to the Department.

Requests must be madewithin 10 working days

.0n receiving your school's request for loan servicing records...

The guaranty agency must provide arepresentative sample of

loan servicing records orthe recordsfor the total population of defaulted

borrowers guaranteed by the-agencywithin 15 working days

rWhen Your school receives the guaranty agency's responseto its request for loan servicing records, it must:

,..

(1) notify thepepartment that it has chosen to withdraw fromthe improper loan servicing appeal processOR

(2) submit to the Department an improper loan servicing, appeal.

....

This must be done within30 Calendar days*

If, however, your school is submitting erroneous data and improper loanservicing appeals simultaneously, the appeals must be submitted within thetime frames outlined on page 83.

9 4



The following table summarizes the time frames for those schools notsubject to the loss of IFIFEL and/or Direct Loan Program eligibtywhen a guaranty agency does NOT charge a processing fee. .

Improper Loan Servicing AppealTime Frames When There is

NO Processing Fee for Schools NotSubject to the Loss of FFEL and/or

Direct Loan Program Eligibility

When your school receives its official-loan-Tecord- detail report, itmust

request a representativeguaranty agenciesletters to the Department.

sample of loan servicing recordsand simultaneously send copies of

fromthe request

Requests must:be madewithin 10 wOrking:daYs

On receiving your school's request forlbansérviCingrecords...

The guaranty agenCYErnust provide arepresentative sample of loan

servicing records orthe'recOrdS forthe total population of defaulted

borrowers guaranteed by:the agencywithin 30 calendar:dais

When your school receives the.guaranty.agency's response to itsrequestfor a representative sample of loan servicing reCords, it must:

(1) notify the Departmentloan servicingOR

(2) submit to the

that it has chosen to withdraw from theappeal process

Department an improper loan servicing appeal.

This must done within.30 calendardayt*

* If, however, your school is submitting erroneous data and improper loanservicing appeals simultaneously, the appeals must be submitted within thetime frames outlined on page 83.

FY 1996 Official Cohort Default Rate Guide9 5


Upon receipt of the school'srequest, a guaranty agency has5 working days to provide themissing records and/orreadable copies. .

Page 87

Appeals

For guaranty agencyaddresses, please see page 3of Appendix Al.

Iniportant:':&thi.spoltit;schoolS have-10 workingdays to act.

Page 88

improper Loan Servicing and Collection Appeal

MIME

How do 11 prepare and siLtibmnt an 0mproper iloansende0ng appea0 to the Department?Step I. Review your school's official cohort default rate notification

letter and this Guide to determine if your school is eligible toappeal based upon allegations of improper loan servicingand collection.

Step 2. Initiate an improper loan servicing appeal.14

(A) Within 10 working days of receiving your school'sofficial loan record detail report, mail the following toeach relevant guaranty agency:

A letter on your school's letterhead with

+ your school's OPE lD number;

a statement requesting loan servicing records;

°f;',. the fiscal year cohort default rate to which therequest applies;

a signature by your school's President/CEO/Owner, followed by a signature block providingthe signer's name and job title;

o:o

AND

a notation that a copy will be sent to theDepartment.

(See sample letter Request for FY [insert year(s)]Representative Sample of Loan ServicingRecords on page 94.)

A copy of the relevant loan record detail report(s).

14. 34 CFR § 668.17(h)(3)(ii)


Appeals

AND

(B) ALSO within 10 working days of receiving yourschool's official loan record detail report, mail thefollowing to the Department:

* A copy of each request for loan servicing recordssent to a guaranty agency.

If your school does not meet this 10-working-day timeframe, the guaranty agency will not respond to yourrequest, and the Department will not review yourimproper loan servicing appeal. This means your schoolwill NOT be eligible to continue with the improper loanservicing appeal process.


Step 3. If required, send processing fees to a guaranty agency.15

A guaranty agency may charge a processing fee of upto $10 for each defaulted loan servicing record providedto a school. If a guaranty agency charges for providingloan servicing records, it notifies the school, in writing,about the required processing fee. A guaranty agencyis not required to provide the records until full payment isreceived.

o A school must pay the required processing fees to aguaranty agency within 15 working days of the date itreceives written notice of fees.

If your school does not meet this 15-working-day timeframe, the guaranty agency will not respond to yourrequest, and the Department will not review yourschool's improper loan servicing appeal related to thatguaranty agency. This means your school will NOT beable to continue with the improper loan servicing appealwith that guaranty agency.

Step 4. Review the loan servicing records from the guaranty agencyand decide how to proceed.

o If the school finds that a record identified in therepresentative sample is missing or illegible and the

15. 34 CFR § 668.17(h)(3)(iii)(F)


Important: At this point,schoolilfave 10 working dayito act

Your schbol does NOT need.to send a copy-of AS' loan;record detail report to the'Department

Time frames wherrguarantyagencies charge a fee.

important At this point;schools have 15 working daysto act

Important At this' Point;.schools haVe 5 Working_daysto acv

Page 89

Appeals

Your school's aPpeal-is NOT, jeopardized if it receivi a lite',

'reply fioin'a 'guarani.; agency.

If your school does not identify, iny erreis, your school shouldWithdraw its appeal. ;

ImPortint. At this point,schools have 30 calendir.clays to act.


school wishes to review the record, it must request themissing or illegible record from the guaranty agencywithin 5 working days of receiving the loan servicingrecords.

A guaranty agency has 5 working days to send themissing records and/or readable copies of the recordsto your school.

A loan servicing record is not considered missing orillegible if all the necessary elements noted in34 C. F. R. Section 668.17(h)(3)(viii) can be identified.Nor is a loan servicing record considered missing orillegible if collection history documents are present andlegible. Therefore, a school may only request additionaldocumentation from the guaranty agency if the loanservicing record in question does not have thenecessary material present to determine if the elementsspecified in 34 C. F. R. Section 668.17(h)(3)(viii) werepresent.

o Within 30 calendar days of receiving ALL loanservicing records from ALL guaranty agencies includingall responses by the guaranty agencies to all timelyrequests for missing or illegible records:

review and determine if any of your school's loansdid not receive loan servicing activities specified in34 CFR § 668.17(h)

AND

decide if your school wants to withdraw from ORcontinue with the improper loan servicing appealprocess. (See Step 5 for details.)

Step 5: Tell the Department whether your school is withdrawingfrom the appeal process or continuing with the appealprocess.

If your school wants to withdraw from the improper loanservicing appeal process, within 30 calendar days ofreceiving ALL relevant guaranty agency responses toyour school's request for loan servicing records, notifythe Department that your school is withdrawing itsimproper loan servicing appeal. (See page 167 on howto withdraw an appeal.)


9 3


OR

o If your school wants to continue with the improper loanservicing appeal process, within 30 calendar days ofreceiving ALL relevant guaranty agency responses,submit a loan servicing appeal to the Department. Yourschool should include ALL records provided by allguaranty agencies in which your school alleges loanservicing errors to the Department. (See sample letterAppeal on FY (insert year(s)] Allegations of ImproperLoan Servicing and Collection, located on page 95.)(See Step 6 for details.)

If your school is submitting both an improper loanservicing appeal and an erroneous data appeal, it maysubmit the two simultaneously based on the later of thetwo time frames. See page 83 for the time frames forsubmitting appeals simultaneously.

Step 6. Submit the improper loan servicing appeal to theDepartment.

* The Department recommends that your school submit itscompleted loan servicing appeal to the Department in asingle, tabbed report binder, and mail it return receiptrequested or via commercial overnight mail/courierdelivery.


FY 1996 Official Cohort Default Rate Guide 9 9 Page 91


'&6; ls do NOT need to sendcopies of the loan Servicingrecords to.the guaranty agency(s)'with the copy of the appealletter.

Schools,shouldMaintain copiesof the loan servicing recordssubmitted to the Department

,

,

The section behind Tab 1 contains: ITab 10 A letter on your school's letterhead with


a statement indicating that your school is submitting an improperloan servicing appeal;

the fiscal year(s) to which the appeal applies;

a certification sentence that indicates that the informationprovided in the appeal, under penalty of perjury, is trueand correct. See 34 CFR §668.17(h)(3)(iv)(F);

a signature by your school's President/CEO/Owner, followed bya signature block providing the signer's name and job title;

AND

a notation that a copy of the appeal letter will be sent to therelevant guaranty agency (or agencies).

(See sample letter Appeal on FY [insert year(s)] Allegations ofImproper Loan Servicing and Collection, on page 95.)

The section behind Tab 2 contains: Tah 2

o copies of all relevant correspondence, including the guarantyagency's (or agencies') responses to the school's requests for loanservicing records. See 34 CFR § 668.17(h)(3)(iv)(B) and (C).

The section behind Tab 3 contains: Tab 3

o a spreadsheet of all alleged loan servicing errors for each guarantyagency. (Use spreadsheet FY (insert year(s)] Appeal onAllegations of Improperly Serviced Loans in the OfficialCohort Rate, located on page 97, or its equivalent.) See34 CFR §668.17(h)(3)(iv)(A) and (E).

The section behind Tab 4 contains:I Tab,4

o a copy of the alleged improperly serviced loan servicing recordsprovided by the guaranty agency (or agencies) identified on thespreadsheet in Tab 3. See 34 CFR §668.17(h)(3)(iv)(B).

Note ONLY send copies of loan servicing records for loansthat your school alleges to be improperly serviced.


1 0 0

Appeals Improper Loan Servicing and Collection Appeal.

If sent by commercial overnight mail/courier delivery, sendyour school's improper loan servicing appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Improper Loan Servicing and

Collection AppealsROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service, send your school's improperloan servicing appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Improper Loan Servicing and

Collection AppealsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the information submitted with theimproper loan servicing eppeal and will not consider informationsubmitted after the regulatory deadlines. The Department will sendthe school and each involved guaranty agency written notification ofits decision. The Department's decision is final and no furtheradministrative review is provided.


The Department will not acceptany appeal correspondence by .

facsimi le (fax) or e-mail.

The Department recommendssending all correspondence returnreceipt requested or viacommercial overnight mail/courierdelivety.

The Department acceptsdeliveries from commercialcouriers and/or hand deliveriesMonday through Friday. 8:00a.m. to 4:30 p.m. Eastern Time).

Page 93

Appeals Improper Loan Senticing and Collection Appeal

rsityéllLäne

eonardtown,

456-7890I.O,O0sin 12345-6789

November 6, 1998

State Guaranty AgencyATTN: Compliance Officer1010 Maple Lane, Suite 200Woodston, Michigan 98765-4321

Sample Letter

OPE ID#: [insert OPE ID#]

Subject: Request for FY (insert year(s)) Representative Sample of LoanServicing Records


Our Town A&M University, OPE ID # /insert OPE ID#], is requesting a representativesample of its loan servicing records for FY [insert year(s)] . Enclosed is a copy of theschool's relevant FY [insert year(s)] official loan record detail report.

Sincerely,

polat DoeJohn Doe, PresidentOur Town A&M University

Enclosures

cc: U.S. Department of Education

Page 94

102


co


1212'Leonardtmtin,

(123) 4 ,690

rsity

5=6789

:.December5, 1998

U.S. Departmentof Education:Default Management DivisionAttn: Impropertoan Servicing and Collection-AppealsROB-3, Room 3905600 IndependenceAvenue, SWWashington, DC 20202-5353

Sample Letter

OPE ID#: (insert OPE ID-#)

Subject: Appeal on FY [insert year(s)] Allegations of Improper Loan Servicingand Collection

To Whom May Concern:

Our Town A&M;University, OPEID4finSert OPE' Ian is submitting its appeal onallegations of improperly serviced lOarinPliided in its'official2FY [insert year(s)] cohortdefault rate.

I., the undersigned, certify that all informatipn provided in this improper loan servicing andcollection appeal is true and correct.

Sincerely,

Doe

ohn Doe, PresidentOur TownA&Muliiiiersity

°sures


103Page 95

App

e O

ng k

mpr

oper

Loa

n S

ernA

idng

and

Co[

Hoc

Uon

How

to f

ill o

ut F

Y [

inse

rt y

ear(

s)]

iiega

tions

of

impr

oper

ly S

ervi

ced

Loa

ns in

the

Off

icia

l Coh

ort D

efau

lt R

ate

spre

adsh

eet

Rec

ord

all l

oans

bei

ng a

ppea

led

to th

e U

.S. D

epar

tmen

t of E

duca

tion

(the

Dep

artm

ent)

usi

ng a

spr

eads

heet

sof

twar

e ap

plic

atio

n su

ch a

sLo

tus

1-2-

3, S

uper

calc

, or

Exc

el. T

he r

esul

ting

spre

adsh

eet i

s se

nt to

the

Dep

artm

ent.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e(h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.

Hea

der:

Foo

ter

Sor

t:

Ent

er F

Y [i

nser

t yea

r(s)

] App

eal o

n A

llega

tions

of

Impr

oper

ly S

ervi

ced

Loan

s in

the

Offi

cial

Coh

ort

Def

ault

Rat

e in

the

cent

er o

f the

hea

der

area

. In

the

uppe

r le

ft, e

nter

you

r sc

hool

's n

ame

and

your

sch

ool's

OP

E ID

num

ber.

In th

e up

per

right

, ent

er th

e to

tal

num

ber

of lo

an s

ervi

cing

rec

ords

for

each

rel

evan

tgu

aran

ty a

genc

y be

ing

subm

itted

to th

e D

epar

tmen

t for

revi

ew.

Ent

er th

e da

te th

e ap

peal

was

pre

pare

d in

the

left

side

of th

e fo

oter

are

a. S

et u

p au

tom

atic

pag

inat

ion

in th

eup

per

right

of t

he fo

oter

are

a so

that

the

spec

ific

page

num

ber

and

tota

l num

ber

of p

ages

sho

ws

on e

ach

page

(fo

r ex

ampl

e: p

age

1 of

10

page

s).

The

rep

oris

houl

d be

a li

stin

g of

all

impr

oper

lyse

rvic

ed lo

ans

in o

rder

by:

1. G

uara

nty

agen

cy c

ode

2. S

ocia

l Sec

urity

num

ber

The

Dep

artm

ent w

ill o

nly

revi

ew th

e al

lega

tions

liste

d on

the

scho

ol's

spr

eads

heet

to th

eD

epar

tmen

t.

On

Row

1, e

nter

exa

ctly

the

sam

e co

lum

n na

me

in e

xact

ly th

e sa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

2 a

nd b

elow

, the

follo

win

g da

ta m

ust b

ein

clud

ed fo

r ea

ch a

llege

d er

ror.

Col

umnl

.:E

nter

the

borr

ower

's S

ocia

l Sec

urity

num

ber

usin

g hy

phen

s to

sep

arat

e th

e nu

mbe

rs (

exam

ple:

000-

88-0

000)

.

Col

umn

2:C

olum

n 3:

Col

umn

4:

Col

umn

5:

Col

umn

6:

Col

umn

7:

Col

umn

8:

Col

umn

9:

Col

umn

10:

Col

umn

11:

Col

umn

12:

Ent

er th

e bo

rrow

er's

nam

e.E

nter

the

loan

type

. Use

FF

EL/

SF

(F

eder

alF

amily

Edu

catio

n Lo

an/S

taffo

rd),

DL/

SF

(Dire

ct L

oan/

Sta

fford

), o

r S

LS (

Sup

plem

enta

l Loa

nfo

r S

tude

nts)

to id

entif

y th

e ty

pe o

f loa

n.E

nter

MM

/DD

/YY

YY

(m

onth

/day

/yea

r) to

iden

tify

whe

n a

dem

and

lette

r (o

ther

than

a fi

nal d

eman

dle

tter)

was

sen

t. Le

ave

blan

k if

a de

man

d le

tter

was

not s

ent.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

whe

n a

tele

phon

e ca

ll to

the

borr

ower

was

atte

mpt

ed. L

eave

bla

nk if

ate

leph

one

call

was

not

atte

mpt

ed.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

whe

n pr

e-cl

aim

sas

sist

ance

was

req

uest

ed b

y th

e le

nder

. Lea

ve b

lank

if pr

e-cl

aim

s as

sist

ance

was

not

req

uest

ed.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

whe

n a

final

dem

and

lette

r w

as s

ent.

Leav

e bl

ank

if a

final

dem

and

lette

rw

as n

ot s

ent.

Ent

er M

M/D

D/Y

YY

Y if

ther

e is

evi

denc

e or

cer

tific

atio

nth

at s

kip

trac

ing

was

per

form

ed. E

nter

N/A

(no

tap

plic

able

) if

not r

equi

red

or le

ave

blan

k if

evid

ence

or

cert

ifica

tion

is n

ot e

vide

nt.

Ent

er X

if a

n ill

egib

le lo

an s

ervi

cing

rec

ord

was

prov

ided

. Lea

ve b

lank

if r

ecor

d w

as le

gibl

e.

Ent

er X

if a

loan

ser

vici

ng r

ecor

d w

as n

ot p

rovi

ded

byth

e gu

aran

ty a

genc

y. L

eave

bla

nk if

rec

ord

was

prov

ided

.

Ent

er X

if a

loan

ser

vici

ng r

ecor

d is

impr

oper

ly s

ervi

ced.

Pro

perly

ser

vice

d lo

ans

are

NO

T to

be

incl

uded

inyo

ur s

choo

l's a

ppea

l to

the

Dep

artm

ent.

Ent

er th

e th

ree

digi

t gua

rant

y ag

ency

cod

e fo

r th

e lo

an.

The

thre

e di

git c

ode

can

be fo

und

in A

ppen

dix

A.

3-C

:3%

-"--

7 If

a st

uden

t has

mor

e th

an o

ne d

efau

lted

loan

and

;Not

e; a

llega

tions

of i

mpr

oper

loan

ser

vici

ng a

re b

eing

mad

e on

eac

h de

faul

ted

loan

, eac

h lo

an m

ust b

elis

ted

sepa

rate

ly o

n th

e sp

read

shee

t.

Sch

ool N

ame

OP

E ID

Num

ber

FY

[ins

ert y

ear(

s)]

App

eal o

n A

llega

tions

of

Impr

oper

ly S

ervi

ced

Loan

sin

the

Offi

cial

Coh

ort D

efau

lt R

ate

Gua

rant

y ag

ency

Gua

rant

y ag

ency

Gua

rant

y ag

ency

# of

loan

s#

of lo

ans

# of

loan

s1:

3

1. B

orro

wee

sS

SN

2. B

orro

wee

sna

me

3. T

ype

oflo

an

(FF

EU

SF

DU

SF

or S

LS)

4. D

ate

dem

and

lette

r(o

ther

than

fina

l

dem

and

lette

r) s

ent

(MM

/DD

NY

VY

or le

ave

blan

k)

5. D

ate

tele

phon

eca

ll

atte

mpt

ed

(MM

/DD

/YY

YY

6. D

ate

pre-

clai

ms

assi

stan

ce

requ

este

d

(MM

/DD

NY

YY

7. D

ate

final

dem

and

lette

r

sent

(MM

IDD

/YY

YY

)

or le

ave

blan

k)

8. D

ate

skip

trac

ing

cert

ified

or

evid

ence

of s

kip

trac

ing

(MM

/DD

/YY

YY

, NIA

,

or le

ave

blan

k)

9.11

1egi

ble

loan

serv

icin

g

reco

rd

prov

ided

(X o

r le

ave

blan

k)

. X .1

..

10. N

o lo

anse

rvic

ing

reco

rd

prov

ided

by

guar

anty

age

ncy

(X o

r le

ave

blan

k)

11. I

mpr

oper

lyse

rvic

ed

(X o

r le

ave

blan

k)

12. G

uara

nty

agen

cyco

de

4-55

5:00

0-44

-000

0B

ill B

row

nF

FE

L/S

F00

0-55

-000

0T

om T

ucke

r, F

FE

L/S

F.

'3-.

.-

ri7/8

/199

681

8119

96'R

t 1/8

/199

6:-

: N.,

--

7' 4

555=

1:

000-

55-0

000

Tom

Tuc

ker

.'''1

SLS

,:;,.

-'

8/9/

1996

9/5/

1996

412R

/199

67;

:i:::.

.folN

/T

zik

_,'

,X,..

,5:

'::

000-

22-0

000

Ken

Woo

di.

FF

EU

SF

1:'..

..:.

%'4

'41-

5.-

.;,

.

,,,.0

000-

33-0

000

Bob

Gra

y.s

; FF

EU

SF

.T

.'

.;:-.

,709

,:`

000-

66-0

000

Mar

y S

mith

-. F

FE

L/S

F..-

,J2/

1/19

968/

9/19

96:1

1/9/

1996

-=`,

1, N

/AX

800

.:,

000-

77-0

000

Jill

Jone

sS

LS:

4/1/

1996

:8/2

/199

610

/2/1

996

' N/A

,7-:

.-.

'!800

:00

0-88

-000

0Jo

hn J

. Doe

FF

EU

SF

,-. -

5/1

/199

6 ,'

-6/2

/199

67/

5/19

967/

5/19

9e

, NIA

:

r N

/A, '

',.,

Xx'

:800

,'

*800

000-

88-0

000

John

J. D

oeF

FE

US

F'

5/1/

1996

'6/

2/19

9600

0-88

-000

0Jo

hn J

. Doe

-S

IS-

5/1/

1996

6/2/

1996

7/5/

1996

'N

/AX

800

,

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

BE

ST

CO

I?A

VA

ILA

BL

E

MM

/DD

/YY

YY

[sen

d to

U.S

. Dep

artm

ent o

f Edu

catio

n]10

-7P

age

ofpa

ges

:Hicep)i2n'orn

C[ITCUMME1i im:

nces

lf, due in part to your school's FY 1996 official cohort default rate, yourschool is subject to initial or extended loss of FFEL Program and/orDirect Loan Program eligibility or is subject to possible action to limit,suspend, or terminate participation in all Title IV federal studentfinancial assistance programs, your school may be able to file anexceptional mitigating circumstances appeal' under one or more ofthe following circumstances:

O If your school certifies relatively few FFEL Program and/orDirect Loan Program loans and your school's FY 1996 cohortdefault rate is below 40.1 percent, you may be able to file anappeal if your participation rate index is .0375 or less2.

O If your school is a non-degree-granting school that enrolls70.0 percent or more of its students from economicallydisadvantaged backgrounds AND has a job placementrate of 50.0 percent or more, you may be able to file an'economically disadvantaged and placement rate appea1.3

O If your school is a degree-granting school that enrolls70.0 percent or more of its students from economicallydisadvantaged backgrounds AND has a programcompletion rate of 70.0 percent or more, you may be able tofile an economically disadvantaged and completion rateappea1.4

Schools also must submit an independent auditor'sattestation to support an exceptional mitigatingcircumstances appea1.5

1. HEA 435(a)(2)(A)(ii)2. 34 CFR § 668.17(c)(1)(i i)(A)3. 34 CFR § 668.17(c)(1)(ii)(B) and (B)(2)4. 34 CFR § 668.17(c)(1)(ii)(B) and (B)(1)5. 34 CFR § 668.17(c)(7)


10 3

A school must be subject tosanctions to submit anexceptional mitigatingcircumstances appeal.

If you are not sure whetheryour school is classified as adegree-granting or oon-degreegranting school, please refer toyour school's Eligibility andCertification Approval Reportgenerated by the Department'sCase Management Division.The telephone number for theCase Management Division is(202) 205-0181:

Further details are providedlater in this section on each ofthese three types ofexceptional mitigatingcircumstances.

Page 99

Appeals

IPlease see page 17 for additionalinformation on sanctions.

A school that is subject to apossible LS&T action due to itsFY 1996 official cohort defaultrate may NOT file anexceptional mitigatingcircumstances appeal on thebasis of its participation rateindex.

Page 100

Exceptional Mitigating Circumstances Appeal

Does my schooD have to be su*ct tosancUons to submft excepUonaD mMgaUngdrcumstances appear?Yes, your school must be subject to sanctions to file an exceptionalmitigating circumstances appeal.

Those schools subject to:

o initial loss of FFEL Program and/or Direct Loan Programeligibility6

o extendedloss of FFEL Program and/or Direct LoanProgram eligibility7

AND/OR

o possible action to limit, suspend, or terminate (LS&T)eligibility to participate in all Title IV federal studentfinancial assistance programs8

can file an exceptional mitigating circumstances appeal based on itseconomically disadvantaged and placement rates or anexceptional mitigating circumstances appeal based on itseconomically disadvantaged and completion rates dependingon whether the school is a degree-granting or a non-degree grantingschool.

Those schools subject to:

o initial loss of FFEL Program and/or Direct Loan Programeligibility

OR

o extended loss of FFEL Program and/or Direct LoanProgram eligibility

may also file an exceptional mitigating circumstances appeal basedon its participation rate index.

A school may NOT file an exceptional mitigatingMote circumstances appeal on the basis of its participation

rate index if its FY 1996 official cohort default rate isgreater than 40.0 percent, even if the school is subjectto initial or extended loss of eligibility to participate inthe FFEL Program and/or Direct Loan Programs.

6. 34 CFR § 668.17(c)(1)(ii)7. Id.8. 34 CFR § 668.17(a)(5)

10J FY 1996 Official Cohort Default Rate Guide

Appeals Exceptional Mittfating Circumstances Appeal

Example 1: Our City College's (OCC) cohort default rates are asfollows

FY 1996: 50.5% FY 1995: 28.7% FY 1994: 29..9%

On notification of its FY 1996 official cohort default rate, OCC, anon-degree-granting school, is subject to a possible LS&T action; it isalso subject to initial loss of eligibility to participate in the FFELProgram because this is its third consecutive cohort default rate of25.0 percent or greater. Therefore, OCC may file an appeal basedon its economically disadvantaged and placement rates. OCC maynot, however, file an exceptional mitigating circumstances appeal onthe basis of its participation rate index because its FY 1996 officialcohort default rate is greater than 40.0 percent.

Example 2: Your Town College's (YTC) cohort default rates are asfollows

FY 1996: 49.7% FY 1995: 26.0% FY 1994: 21.7%

On notification of its FY 1996 official cohort default rate, YTC, adegree-granting school, is subject to a possible LS&T action but isnot subject to initial or extended loss of eligibility to participate in theFFEL Program and/or Direct Loan Program. YTC may file anexceptional mitigating circumstances appeal based on itseconomically disadvantaged and completion rates since it is subjectto a possible LS&T action due to its FY 1996 cohort default rates:YTC may not, however, file an exceptional mitigating circumstancesappeal on the basis of its participation rate index because its FY1996 official cohort default rate is greater than 40.0 percent and as aresult is subject to possible LS&T action.

How can a successfuEl excepUona niNgangcrcumstances appeaA affect my schoorsoffica cohort dem& irate?If your school's appeal is successful, the Department withdraws itsnotification of loss or extension of loss of your school's eligibility toparticipate in the FFEL Program and/or Direct Loan Program and/orthe Department's notification that your school is subject to an action toLS&T its participation in all Title IV student financial assistanceprograms.9 A successful exceptional mitigating circumstancesappeal does NOT, however, change your school's official cohortdefault rate.

9. 34 CFR § 668.17(c)(5) and (a)(5)


110

Q. What effect does asuccessful FY 1996excePtional mitigatingcircumstances appeal have onfuture FFEL Program and/orDireCt Loin Pmgrameligibihtydeterminations based, in part,on my school's FY 1996official cohort default rate?

A. None. Regardless of a

successful FY 1996exceptional mitigatingcircumstances appeal, yourschool's FY 1996 officialcohort default rate may beconsidered in future FFELProgram and/or Direct LoanProgram determinations basedon its cohort default rates.

Page 101

Appeals

If your school selects anunacceptable 12-month period,its appeal will be denied.

Your school's 12-month periodcannotoverlapthcstartingdate..

0 Acceptable:

June 20, 1994 toJune 19,1995

0 Not Acceptable:

June 20, 1994 toJune 20, 1995

Page 102


What rolls does a guaranty agency orLArrect Loan seMcer have hl my schoorsexcepUona0 rrfflgathlg chscumstances appeall tothe Department?

Neither a guaranty agency nor the Direct Loan servicer has a role inyour school's exceptional mitigating circumstances appeal.Exceptional mitigating circumstances appeals are submitted directly tothe Department for review and consideration.

Must.appeas be on the bass of specRic tlimeperllods?

For each exceptional mitigating circumstances appeal, your schoolmust base its appeal on a specific 12-month period. The regulationsprovide that an exceptional mitigating circumstances appeal must bebased on "a 12-month period that has ended during the six monthsimmediately preceding the fiscal year for which the cohort of studentsused t6calculate the institution's rate is determined."10 Accordingly, foran exceptional mitigating circumstances appeal submittedimmediately after the school's receipt of the FY 1996 cohort defaultrate, your school must select a 12-month period that has a start datethat is no earlier than April 2, 1994 and no later than October 1,1994.

For example:

Acceptable: April 2, 1994 April 1, 1995

Not Acceptable: April 1, 1994 March 31, 1995

Acceptable: October 1, 1994 - September 30, 1995

Not Acceptable: October 2, 1994 - October 1, 1995

10. 34 CFR § 668.17(c)(1)(ii)(A) and (13,)

111

FY 1996 Official C6hort Default Rate Guide

Appeals Exceptional Mitigating Circumstances Appeal

What are the &me frames for submkUng anexcepUonaD mMgat`dng drcumstances appear?

Timing is critical. Your school must submit its exceptionalmitigating circumstances appeal and the independent auditor'sattestation within the following regulatory time frames.

Within 30 calendar days of receiving its official notificationthat your school is subject to sanctions, your school mustsubmit its exceptional mitigating circumstances appeal to theDepartment."

° Within 60 calendar days of receiving its official notificationthat your school is subject to sanctions, your school orindependent auditor must submit an independent auditor'sattestation of your appeal to the Department.12

The following chart summarizes the time frames for schools to appealbased on exceptional mitigating circumstances.

Tnme Frames for ENcepUonaD MigathlgarcumsftncesAppeas

School redeives offioial, notification thatitiiSUbje4 to .

sanCtions baied`on its,official cOhOrt defaUlii=ate:i'

within =calendar days

Sthoolsmails its complete,appeal to the Departnient-

within 60Icalendar days

Schootor independent auditormails ah-atteStation on.the-appeal to the Department

11. 34 CFR § 668.17(c)(1)12. 34 CFR § 668.17(c)(7)


112

In counting calendar days,federal holidays are NOTexcluded.

Important: At this point,schools have 30 calendar daysto act.

Important: At this point,schools have 60 calendar daysto act

If your school fails to meeteither of the time frames, theDepartment will NOTreview the appeal.

Page 103

Appeals

The Statement on Standardsfor Attestation Engagements#3 is published in the mostrecent American Institute ofCeilifredPublicAccountants'Codification OfStateinents onAuditiniStandards.


What is an independent auditor's attestation?

An auditor's attestation is a certified public accountant's opinionaccording to the American Institute of Certified Public Accountants'(AICPAs) Statement on Standards for Attestation Engagements #3on an assertion made by management on your school's exceptionalmitigating circumstances appeal.13 The regulations provide that if aninstitution appeals on the grounds that it meets the exceptionalmitigating circumstances criteria, the institution must also include inits appeal an opinion from an independent auditor on management'sassertions that the information contained in the appeal is complete,accurate, and determined in accordance with the Department'sregulations in 34 CFR § 668.17(c)(1)(ii). The institution or auditormust submit the attestation to the Department within 60 calendardays of the institution receiving notification that it is subject tosanctions.

The AICPAs' Statement on Standards for Attestation Engagements#3 contains the reporting requirements and guidelines the auditormust follow when providing an opinion on management's assertions.The auditorwill express an opinion about whether management'sassertion that the institution complied with the exceptional mitigatingcircumstances regulations is fairly presented in all material respects.For a sample letter of an auditor's attestation, see page 119.

Before making the attestation, is the auditorrequired to perform a NH-Me review of myschoors records?The auditor must follow the A1CPAs' Statementon AttestationEngagements #3 and perform all other procedures that the auditorbelieves are reasonably necessary to complete the attestation. Theauditor should follow all standards that are applicable to anexamination level engagement and, on the basis of his or herprofessional judgement, determine the nature and extent of theprocedures that are necessary for him or her to express an opinion onmanagement's assertion.

13. 34 CFR § 668.17(c)(7)


113

Appeals

Partildllpaglon Rage llnder Cr Raglan

Exceptional Mitigating Circunistances Appeal

To file an exceptional mitigating circumstances appeal based on theparticipation rate index, your school must:

<> be subject to initial or extended loss of eligibility to participatein the FFEL Program and/or Direct Loan Program,

AND

o have an FY 1996 cohort default rate less than 40.1 percent,

AND

o have a participation rate index equal to or less than .0375.14

The participation rate index is the fraction of your school's regularstudents enrolled on at least a half-time basis who were awarded aloan under the FFEL Program and/or Direct Loan Program during aselected 12-month period as required in 34 CFR § 668.17(c)(1)(ii)(A)multiplied by your school's FY 1996 official cohort default rate.

NoteA school with an FY 1996 official cohort default rategreater than 40.0 percent may NOT submit anexceptional mitigating circumstances appeal on thebasis of its participation rate index.15

The checklist on the next page summarizes the participation rateindex eligibility criteria.

14. 34 CFR § 668.17(c)(1)(ii)(A)15. Id.


A school mustselect a12-month period that has astart date that is no earlierthan April 2, 1994 and nolater than October 1, 1994.

See page 102 for furtherinformation on selecting a12-month period

Page 105


Page 1-06

Exceptionai Mitigating CircumstancesAppeai Based on the Participation

Rate index EElElgEllbElElElty Checklist

To be eligible to appeal based on its participation rate index, yourschool must meet the following criteria:

10 Your school is subject to either of these sanctions

O initial FFEL Program and/or Direct Loan Programloss

OR

o extended FFEL Program and/or Direct LoanProgram loss.

Your school's participation rate index is .0375 or less asdescribed in 34 CFR § 668.17(c)(1)(ii)(A).

01 Your school's FY 1996 official cohort default rate is below40.1 percent.

SUBMTING

How do [I cabcuate t le participation rate index?

The participation rate index (PRO' 6is calculated as follows:

your school'sFY 1996 officialcohort default rate[Al]

number of regular students enrolled on at leasta half-time basis who received an FFELProgram loan or Direct Loan Program loan fora loan period that overlaps the selected 12-month period by at least one day [A2]

number of regular students enrolled on atleast a half-time basis during the selected 12-month period [A3]

Information on how to select an acceptable 12-mOnthNote

period is provided on page 102.

16. 34 CFR § 668.17(c)(1)(ii)(A)

115

FY 1996 Official Cohort. Default Rate Guide


To succeed on an exceptional mitigating circumstances appealbased on your school's participation rate index, your school musthave a participation rate index of .0375 or less.17

Example: Hometown Academy's (HA) FY 1996 official cohortdefault rate is 25.0 percent. HA had a total of 200 regularstudents enrolled on at least a half-time basis during theselected 12-month period. Of those 200 students, 14 studentsreceived an FFEL Program loan for a loan period that overlapsthe selected 12-month period by at least one day and 12different students received a Direct Loan Program loan for aloan period that overlapped the selected 12-month period by atleast one day. HA's participation rate index is calculated asfollows:

25.0% [Al]

14 (FFEL) + 12 (DL) = 26 [A2],

200 [A3]

.0325

Therefore, its participation rate index

=A1 xA2 /A3 = 25.0 x 26 /200 =.0325

Hometown Academy's participation rate index is .0325. Because thisis less than .0375, HA can file an exceptional mitigatingcircumstances appeal on the basis of its participation rate index.

How does my schod prepare and submiit aneNceptionaD mMgatring idrcumstances appeal]based on ks partMpation rate ndelK to theDepartment?

Step 1: Review your school's official cohort default rate notificationletter and this Guide to determine if your school is eligibleto submit an exceptional mitigating circumstances appealbased on its participation rate index.

17. 34 CFR § 668.17(c)(1)(ii)(A)

Refa to the beginning of thissection for a detailed discussionregarding which schools areeligible to appeal based on theparticipation rate index.


1. 1 (3

Appeals

A "regular student" is defined asa person who is enrolled, oraccepted for enrollment, in aneligible program at an eligiblepostsecondary institution for thepurpose ofôbtaining a degree,certificate, or other recognizededucational credential offered bythat institution as defined in34 CFR§ 600.2.

In your list of "regularstudents" enrolled on at least ahalf-time basis, you mustinclude students who:

began enrollment before the.12-month period and endedenrollment during or afterthe 12-month period,

AND/OR

began enrollment during the12-month period and endedenrollment during or afterthe 12-month period.

Q. If more than one loanperiod falls during theselected 12-month period,which loan data should myschool use?

ilk. List both; the studentwill be counted only once.

Q. If a student has abreak in enrollment and leavesschool, then returns andbegins a new enrollmentperiod, all during the selected12-month period, whichenrollment dates should myschool use?

ilk. List both; the studentwill be counted only once.


Step 2: Calculate and list the following data to support yourschool's participation rate index.

Use the spreadsheet FY 1996 Participation RateIndex (PRI) on page 117 or its equivalent to count andlist the students who will be included in your school'sparticipation rate index.

On the PRI spreadsheet, fill out your school's name andOPE ID Number.

Select an acceptable 12-month period and enter it onthe PRI spreadsheet (see page 102 for details on howto select a 12-month period).

Fill out Column 1 of the PRI spreadsheet: in numericalorder, list the Social Security numbers of all yourregular students enrolled on at least a half-time basisduring any part of the selected 12-month period.

Fill out Column 2 of the PRI spreadsheet: for eachSocial Security number, list the student's name.

Fill out Column 3 of the PRI spreadsheet: for eachstudent, provide beginning and endingenrollmentdates. For all enrollment dates, include the month, dayand year (MM/DD/YYYY).

Fill out Column 4 of the PRI spreadsheet: if the studentreceived an FFEL Program loan or a Direct LoanProgram loan during the selected 12-month period,enter X. (If not, do not make an entry.)

The students for whom you enter X will be thosestudents who received FFEL Program loans and/orDirect Loan Program loans for a period ofenrollment that coincides with any part of the 12-month period selected. Ifany part of the loan periodfalls within the 12-month period, the student must beidentified and counted as having received a studentloan.

No student may be counted more than once in thecalculation, even if the studentwas awarded more thanone loan.


117


Fill out Column 5 of the PRI spreadsheet: For eachstudent with an FFEL Program loan or a Direct LoanProgram loan, provide the beginning and ending datesof the loan period.

o Complete Box A by identifying your school's FY 1996official cohort default rate, which is found on yourschool's most recent notification letter from theDepartment. This is Al in the calculation. Enter this ratein Box A on the PRI spreadsheet.

o Count the number of Xs that appear in Column 4. Thetotal number of Xs will be A2 in the calculation. Recordthis number in Box A on the PRI spreadsheet.

o Count the total number of students listed in the PRIspreadsheet by counting the number of entries inColumn 1. The total number of students will be A3 in thecalculation. Record this number in Box A on thePRI spreadsheet.

Step 3:

Calculate Al x A2 I A3 and record the result in Box A onthe PRI spreadsheet. This is your school'sparticipation rate index.

For a successful appeal, your school's participation rateindex must be .0375 or less.

Submit your school's properly completed exceptionalmitigating circumstances appeal on the basis of itsparticipation rate index.

o Within 30 calendar days of your school receivingnotification that your school is subject to initial orextended loss of FFEL Program and/or Direct LoanProgram eligibility, mail your exceptional mitigatingcircumstances appeal to the Department.

o The Department recommends that your school submit itsproperly completed exceptional mitigatingcircumstances appeal in a single, tabbed binder, andmail it return receipt requested or via commercialovernightdelivery.


tht'sschoals hate 311caleadir daysto act.:


113

AppealsExceptional Mitigating Circumstances Appeal

Important: At this point,schools have 60 calendar daysto act.

More information on theauditor's'attestation is providedon page,104.

The section behind Tab 1 contains: Tali 1

0 A letter on your school's letterhead with


a statement indicating that your school is submitting anexceptional mitigating circumstances appeal based on yourparticipation rate index;

the fiscal year to which the appeal applies;

a certification statement that all information in the appeal istrue and correct. See 34 CFR § 668.17(c)(6);

AND

a signature by your school's President/CEO/Owner, followedby a signature block providing the signer's name and job title.

(See sample letter FY 1996 Exceptional MitigatingCircumstancesAppeal Based on the Participation Rate Index, on page 113.)


.(> A completed PRI spreadsheet with a list of all studentsused to calculate your participation rate index. (Use spreadsheet FY1996 Participation Rate Index, on page 117, or its equivalent.)

Tab 2 1

Step 4: Submit an independent auditor's attestation.

o Within 60 calendar days of your school receivingofficial notification that your school is subject to initial orextended loss of FFEL Program and/or Direct LoanProgram eligibility, mail an independent auditor'sattestation of your school's exceptional mitigatingcircumstances appeal on the basis of its participationrate index to the Department.

o The attestation should be in the form of a letter on theindependent auditor's letterhead with

yourschool's name;



an opinion on management's assertion that theinformation contained in the appeal is complete,accurate, and determined in accordancewith theDepartment's regulations in34 CFR § 668.17(c)(1)(ii);


113


AND

a signature by the independent auditor, followed bya signature block providing the signer's name andjob title.

(See sample letter Independent Accountant'sAttestation Report for Exceptional MitigatingCircumstances Appeal Based on FY 1996Participation Rate Index, located on page 119 .)

If a school or auditor fails to meet the regulatory timeframes for the appeal and/or attestation, theDepartment will NOT review its appeal." TheDepartment's decision is final and no furtheradministrative review is provided.

18. 34 CFR § 668.17(c)(1)

FY 1996 Official Cohort Default Rate Guide 120 Page 111

Appeals

The-Department will not acceptany appeal concspondence byfacsiniile(fix)or

TheDepartinaii recant:tends....sending all Correspondence returnreceipt requested'orcommercial oVernightmail/courierdeliVery.

The DePirtment acceptsdeliveries from commercialcouriers and/or hand deliveriesMonday through Friday, 8:00a.m. to 4:30 p.m. (Eastern Time).


If sent by commercial overnight mail/courier delivery, sendyour exceptional mitigating circumstances appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Exceptional Mitigating

Circumstances AppealsROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service, send your school's exceptionalmitigating circumstances appeal to:

U.S. Department of EducationDefault Management DivisionATTN: Exceptional MitigatingCircumstances AppealsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the information submitted with theexceptional mitigating circumstances appeal and will not considerinformation submitted afterthe regulatory deadlines. TheDepartment will send the school written notification of its decision.The Department's decision is final and no furtheradministrative review is provided.


1 1

Appeals

November 20, 1998

urTown212 Beil Lahe

.Leonardtown, Wisconsin 12345-6789(123) 4561.7890


Sample Letter

U.S. Department of EducationDefault Management DivisionATTN: Exceptional Mitigating Circumstances AppealsROB 3, Room 3905600 IndependenceAvenue, SWWashington, DC 20202-5353

OPE ID #: [insert OPE ID#]

Subject: FY 1996 Exceptional Mitigating Circumstances Appeal Based onthe Participation Rate Index


Our Town A&M University, OPE ID # [insert OPE ID#], is submitting its FY 1996exceptional mitigating circumstances appeal based on its participation rate index.

I, the undersigned, certify under penalty of perjury, thatthe school's participation rateindex is [insert .0)001 and that all other information submitted in support of this

exceptional mitigating circumstances appeal is true and correct.

Sincerely,

Palm VoeJohn Doe, PresidentOur Town A&M University

Enclosures


122Page 113

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December 15, 1998

1212 Main StreetDunicirk,'Maine 111.11-2222(111)111,1111

U.S. Department of EdutationDefault Management bivisionATTN: Exceptional Mitigating Circumstances AppealsROB 3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

NC.

Sample Letter

OPE '115#: [insert OPE IDtf]

Subject: Independent Accountant's Attestation Report for Exceptional MitigatingCircumstances Appeal Based on FY 1996 Participation Rate Index

To Whorn It May Concern:

We have examined management's assertion included in its representation letter, dated [insert

dater stating 'that the information contained in [insert school's name]'sOPE-ID # [insert OPE

IDif] exceptional mitigating circumstances appeal based on its participation rate index, iscomplete, accurate and determined in accordance with the requirements of34 CFR § 668.17(c). As discussed in that representation letter, management is responsible for

[insert school's naMe]'s compliance with those requirements. Our responsibility is to express an

opinion on management's assertion about the institution's compliance based on our

examination.

Our examination was made in accordance with standards established by the American Institute

of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence

about [insert school's name]'s compliance with 34 CFR § 668.17(c) and performing such other

procedures as we considered necessary in the circumstances. We believe our examination

provides a reasonable basis for our opinion. Our examination does not provide a legal

determination on [insert school's name]'s compliance with specified requirements.

In our opinion, management's assertion; that the information contained in [insert school'snamers appeal, dated [insert date], which reports that [insert school's name] has a participation

rate index of [insert PR/.0XXX) for the twelve-month period beginning on [insert MMODNYYYJ

and ending on [insert MM/DD/YYMis:complete, accurate, and determined in accordance withthe requirements set forth in 34 CFR § 668.17(c), is fairly stated, in all material respects.

This report is intended solely for the inforMation of an audit committee, management, and the

U.S. Department of Edtkation. ThiS report-is, however, a matter of public record and its

distribution. is,not

Respectfully submitted,

74.9 SinaiMary Smith, CpAPresident, GlôbalAbcöunting,in


123Page 119

Appeals

O ECOnomllcalllly Dilsadvangaged

and Pllacemeng' Rages Crfferlla


To file an exceptional mitigating circumstances appeal based oneconomically disadvantaged and placement rates, your schoolmust:

* be subject to sanctions,

AND

* be a non-degree-granting school,19

AND

* demonstrate that 70.0 percent or more of its regular studentsduring a selected 12-month period were individuals whocame from disadvantaged economic backgrounds,2°

AND

0 demonstrate that 50.0 percent or more of its students whowere initially enrolled on at least a half-time basis, remainedenrolled beyond the point that they would receive a 100percenttuition refund and, were originally scheduled tocomplete their programs during the same 12-month periodidentified above obtained employment in the occupationsfor which the school provided training.21

The checklist on the next page summarizes the eligibility criteria foran exceptional mitigating circumstances appeal based oneconomically disadvantaged and placement rates. Review thechecklist to determine your school's eligibility to appeal based onexceptional mitigating circumstances.

19. 34 CFR § 668.17(c)(1)(ii)(B)(2)20. 34 CFR § 668.17(c)(1)(ii)(B)21. 34 CFR § 668.17(c)(1)(ii)(B)(2)


If you are not sure whether, your school is Classified as a

degree-gtantingornon-degree-grantingschool,-please refer toyour School's Eligibility andCertification Approval Reportgenerated by the Department'sCaSe Management Division.The ielephone number for theCase.Manageinent Division is(202).205-0183.

A Schoormust select a12-MOnth peried that has astart date that is no earliertharr.kPril 2, 1994 and nolater:than October 1, 1994.

See.page 102 for furtherinformation on selectine a12month period.

Page 121

Appeals

These aplieal criteria are onlyfor non-degree-grantirigschools.

Page 122


ExcepUonaA MidgathgUrcR,gmetances ppea

Eased on theEconomkcally ansadvantaged

and Pllacement RatesEllñbty CheckHat

To be eligible to appeal based on its students' economicallydisadvantaged rate and placement rates, your school must meetthe following criteria:

LIT Your school is subject to one of the following sanctions

O initial FFEL Program and/or Direct Loan Programloss

OR

O extended FFEL Program and/or Direct LoanProgram loss

AND/OR

O possible action to limit, suspend, or terminate(LS&T) eligiblity to participate in all Title IV studentfinancial assistance programs.

U Your school is a non-degree-granting school that

enrolls 70.0 percent or more of its students fromdisadvantaged economic backgrounds as describedin 34 CFR § 668.17(c)(1)(ii)(B)

AND

O can demonstrate that 50.0 percent or more of itsstudents were placed successfully as described in34 CFR § 668.17(c)(1)(ii)(B)(2).

131



Kow do 11 ca11cu11ate t le economica00ydisad.vantaged rate and the pilacement rate?

The economically disadvantaged rate (EDR)22 is the followingpercentage:

100

Note

number of regular students enrolled during the selected12-month period who had an EFC of zero or AGI lessthan the HHS poverty level [B1]

number of regular students enrolled during theselected 12-month period [B2]

Information on how to select an acceptable 12-monthperiod is provided on page 102.

The placement rate (PR)23is the following percentage:

100

number of regular students, initially enrolled on atleast a half-time basis and originally scheduled tocomplete their programs during the selected 12-monthperiod who either :

(1) were employed in an occupation for which theschool provided training on the day following12 months after their last day of attendance atthe school,

AND/OR

(2) were employed in an occupation for which theschool provided training for at least 13 weeksbefore the day following 12 months after theirlast day of attendance [C1]

number of regular students who were initially enrolledon at least half-time basis and were originallyscheduled to complete their programs during theselected 12-month period [C2]

22. 34 CFR § 668.17(c)(1)(ii)(B)23. 34 CFR § 668.17(c)(1)(ii)(B)(2)


1 '3

EFC: Expected FamilyContribution

AGI: Adjusted GrOisIncome

HHS: U.S. Departmentof Health and HunianServices (For povertylevel guidelines, seepage 134.)

Your school must use the same12-month period for calculatingboth rates.

The 13 weeks of employmentcan include relevantemployment any time after thestudent's beginning enrollmentdate. But the 13 weeks must becompleted before the dayfollowing 12 months after-thestudent's last day of atten-dance.

The denominator count of theplacement rate includes allregular students who remaiedin the program beyond thepoint the students would havereceiyed a one hundredpercenttuition refund from theinstitution. See 34 C.F.R.Section 668.17(c)(1)(ii)(B)(2).

Page 123

AppealsExceptional Mitigating Circumstances Appeal .

Refer to the beginning of thissection for a detailed discussionregarding which schools areeligible to appeal based on theeconomically disadvantaged andplacement rates.

A "regular student" is defined asa person who is enrolled, oraccepted for enrollment, in aneligible program at an eligiblepostsecondary institution forthe purpose of obtaining adegree, certificate, or otherrecognized educational credentialoffered by that institution asdefined in 34 CFR § 600.2.

In your list of "regularstudents" you must includestudents who:

0 began enrollment before the12-month period and endedenrollment during or afterthe 12-month period,

AND/OR


Page 124

To succeed on an exceptional mitigating circumstances appealbased on your school's economically disadvantaged and placementrates, your school must have an economically disadvantaged rate of70.0 percent or more and a placement rate of 50.0 percent or more.

How does my schod prepare and submK ineNceptkonall mMgathg ch'cumstances appeaon the basAs of Ks economkcany disadvanthgedand pilacement rates to t le Department?Step 1 Review your school's official cohort default rate notification

letter and this Guide to determine if your school is eligibleto submit an exceptional mitigating circumstances appealbased on its economically disadvantaged and placementrates.

Step 2: Calculate and list the following data to support yourschool's economically disadvantaged rate.

o Use the spreadsheet FY 1996 EconomicallyDisadvantaged Rate (EDR) on page 139 or itsequivalent to count and list the students who will beincluded in the calculation ofyour school's economicallydisadvantaged rate.

o On the EDR spreadsheet, fill out your school's nameand OPE ID Number.

o Select an acceptable 12-month period and enter it onthe EDR spreadsheet (see page 102 for details onselecting an acceptable 12-month period).

Fill out Column 1 of the EDR spreadsheet: innumerical order, list the Social Security numbers of allyour regular students enrolled during any part of theselected 12-month period. No student will becounted more than once in the calculation.

O Fill out Column 2 of the EDR spreadsheet: for eachSocial Security number, list the student's name.

Fill out Column 3 of the EDR spreadsheet: for eachstudent, provide beginning and ending enrollmentdates. For all enrollment dates, include the month, day,and year (MM/DDNYYY).


133

Appeals

EFC TEST

AGO TEST


Fill out Column 4 of the EDR spreadsheet: if thestudent was from an economically disadvantagedbackground during the selected 12-month period, asdescribed below, enter X. (If not, leave blank.)

If you enter X for a student in Column 4, either

(1) the student must have an EFC of zero for any awardyear that generally coincides with the 12-monthperiod,

OR

(2) the student and, if applicable, his or her parents orspouse must have an adjusted gross income (AGI)less than the Health and Human Services (HHS)poverty levels for any calendar yearthat generallycoincides with the 12-month period. The HHSpoverty levels are shown on Page 134.

To determine whether a student qualifies aseconomically disadvantaged under the EFC test, firstidentify which award years overlap by at least one daywith your school's selected 12-month period. If thestudent had a zero EFC in any of the overlapping awardyears, he or she qualifies as economicallydisadvantaged. For example:

Selected 12-month period: April 2, 1994 to April 1,1995

Acceptable (overlapping) award years: 1993-1994or 1994-1995

If the student does not qualify based on EFC, he or shemay still qualify based on AGI. To determine if thestudent is economically disadvantaged on the basis ofthe AGI test, identify which calendar years could beused to determine an EFC for award year that"generally coincides" with the selected 12-month period.

An-award yearbegina on.July+and ends on June 30: The19931994 award Year beganJuly.1, 1993 and endedJiine 30;

An award year "generallycoincides" with a 12-monthperiod if they overlap by at leastone day.

Q. What if a student has anEFC of zero, but the award yeardoes not Overlap the 12-month

9-

The atudent is notconsidered economicallydisadvantaged unless he or she hasa qualifying AGI that generallycoincides with The 12-monthperiod.

A calendar year "generallycoincides" with a 12-monthperiod if the calendar yearassociated with the AGI couldhave been used to determine astudent's EFC for an award yearthat "generally coincides" withthe 12-month period chosen bythe school.


134

Appeals

To determine acceptable calendaryears, first determine acceptableaward years.

Students with an EFC of zeromust have an-award year listedon-tlie-spreidsheetto-be _

included in the numerator of thecalculation.

A student with an AGI thatmeets the poverty thresholdmust have a family size andcalendar year listed on thespreadsheet to be included.in thenumerator of the calculation.


If the student and, if applicable, his or her parents orspouse had an AGI below the HHS poverty level in anyof the acceptable calendar years, the student qualifiesas economically disadvantaged under the AGI test. Forexample:

Selected 12-month period: October 1, 1994 toSeptember 30, 1995


Acceptable calendar years: 1993, 1994, 1995

The 1993, 1994 and 1995 calendar years areacceptable calendar years because the 1993and/or 1994 calendar year could be used todetermine an EFC for the 1994/1995 awardyear. The 1994 and/or 1995 calendar year couldbe used to determine an EFC for the 1995/1996award year.

O Fill out Column 5 or Column 6 of the EDR spreadsheet:for each student from a disadvantaged economicbackground, provide:

EITHER

the EFC and the award year that generallycoincides with the selected 12-month period (inColumns 5a and 5b)

OR

the AGI, family size, and calendar year thatgenerally coincides with the selected 12-monthperiod (in Columns 6a, 6b, and 6c)

O Complete Box B by counting the number of Xs thatappear in Column 4. The total number of Xs will be B1in the calculation. Record this number in Box B on theEDR spreadsheet.

o Count the total number of students listed in the EDRspreadsheet by counting the number of entries inColumn 1. The total number of students will be B2 inthe calculation. Record this number in Box B on theEDR spreadsheet.



o Calculate 100 x B1 / B2 and record the result in Box Bon the EDR spreadsheet. This percentage is yourschool's economically disadvantaged rate.

NoteAs part of a successful appeal, your school'seconomically disadvantaged rate must be 70.0 percentor.greater.

Step 3: Calculate and list data to support your school's placementrate.

o Use the spreadsheet FY 1996 Placement Rate (PR)on page 143 or its equivalent to count and list thestudents who will be included in the calculation of yourschool's placement rate.

On the PR spreadsheet, fill out your school's name andOPE ID Number.

Enter and use the same 12-month period as on theFY 1996 Economically Disadvantaged Ratespreadsheet.

Fill out Column 1 of the PR spreadsheet: In numericalorder, liSt the Social Security numbers of all yourstudents who meet the following conditions:

regular students who were initially enrolled on atleast a half-time basis at your school,

AND

at the time of their enrollment, were originallyscheduled to complete their programs during theselected 12-month period,

AND

remained in the program beyond the point at whichthey would have received a 100 percent tuitionrefund from your school.

No student will be counted more than once in thecalculation.


1 3 i3

A "regular student" is defined asa person who is enrolled, or.accepted for enrollment, in aneligible program at an eligible'postsecondary institution foritEle purpose of obtaining a'degree, certificate, or otherrecognized'educational'credential offered by thatinstitution as defined in34 CFR § 600.2.

The denominator count mustalso include all sthdents whowere initially enrolled on at leasta half-time basis at your schooland were scheduled to completethe program during the 12-month period but WITHDREWfrom the program after theypassed the point to receive aone-hundred percent tuitionrefund from your school.

Page 127

Appeals

All dates included in the Pitspreadsheet mUSt include 'month,'day,'and year.

Exceptional Mitigating Circumstances Appdal

Fill out Column 2 of the PR spreadsheet: for eachSocial Security number, list the student's name.

Fill out Column 3 of the PR spreadsheet: provide eachstudent's address.

Fill out Column 4 of the PR spreadsheet: provide eachstudent's program of study. Do not use abbreviations.

Fill out Column 5 of the PR spreadsheet: provide thedate that each student was originally scheduled, at thetime of enrollment, to complete his or her program ofstudy.

If the studentwas initially enrolled half-time, thescheduled to complete date will be based on theamount of time it would take the student to completethe program if he or she remained enrolled half-time.

G:0 If the student was initially enrolled full-time, thescheduled to complete date will be based on theamount of time normally required by a full-timestudent to complete the program, as specified in theschool's enrollment contract, catalog, or othermaterials.

Fill out Column 6 of the PR spreadsheet: for eachstudent, provide beginning and ending enrollmentdates.

o Fill out Column 7 of the PR spreadsheet: if the studentwas successfully placed in employment according to atleast one of the following two conditions, enter X. (If not,do not make an entry.)

(1) A student is successfully placed if he or she isemployed in an occupation for which your schoolprovided training on the day following 12 monthsafter the date of the student's last day of attendanceat your school.

OR


137


(2) A student is successfully placed if he or she wasemployed in an occupation for which your schoolprovided training for at least 13 weeks (91 days)before the day following 12 months after the date ofthe student's last day of attendance at your school.

A student cannot be counted as successfully placedaccording to either of these two conditions if yourschool is the employer.24

o Fill out Column 8 of the PR spreadsheet: for eachstudent successfully placed, provide the beginningand ending dates of the employment that qualifies thestudent as successfully placed.

Fill out Column 9 of the PR spreadsheet: for eachstudent successfully placed, provide the student's jobtitle in the employment that qualifies the student assuccessful placement. Do not use abbreviations.

* Fill out Column 10 of the PR spreadsheet: for eachstudent successfully placed, provide the name,address, and telephone number of the employerwith which the student was successfully placed.

If the employer's place of business is closed, you mustprovide the Department with a notarized statement fromthe student verifying the place of employment, job title,dates of employment, and how the student may becontacted.

Complete Box C by counting the number of Xs thatappear in Column 7. The total number of Xs will be Clin the calculation. Record this number in Box C on thePR spreadsheet. This is the number of students whowere successfully placed in employment.

o Count the total number of students listed in thePR spreadsheet by counting the number of entries inColuMn 1. The total number of students will be C2 inthe calculation. Record this number in Box C on the

24. 34 CFR § 668.17(c)(1)(ii)(B)(2)


The 13 weeks of employmentcan include relevantemployment any time after thestudent's beginning enrollmentdate. But the 13 weeks must becompleted before the dayfollowing 12 months after thestudent's last day ofattendance.

If the Department cannot verifya student's successfulplacement on the basis of the

information your schoolprovides, the student will beremoved from the count ofsuccessfully placed students.

Page 129


'Important: At this point,schools have30 calendar'daysto act.

PR spreadsheet. This is the number of students initiallyenrolled on at least a half-time basis who were originallyscheduled to complete their programs during theselected 12-month period and remained in the programbeyond the point that they would have received a 100percent tuition refund from your school.

o Calculate 100 x C1IC2 and record the result in Box Con the PR spreadsheet. This percentage is yourschool's placement rate.

Step 4:

Note As part of a successful appeal, your school's placementrate must be 50.0 percent or greater.

Submit your school's properly completed exceptionalmitigating circumstances appeal on the basis ofeconomically disadvantaged and placement rates.

Within 30 calendar days of your school receivingnotification that it is subject to sanctions, mail yourschool's exceptional mitigating circumstances appealto the Department.

The Department recommends that your school submitits properly completed exceptional mitigatingcircumstances appeal in a single, tabbed binder, andmail it return receipt requested,or via commercialovernight delivery.

The recommended tabs aria 'Materials are shown on thenext page.


133


The section behind Tab 1 contains:O A letter on your school's letterhead with


+ a statement indicating that your school is submitting anexceptional mitigating circumstances appeal based onyour economically disadvantaged rate and your placementrate;

+ the fiscal year to which the appeal applies;

+ a certification statement that all information in the appealis true and correct. See 34 CFR § 668.17(c)(6);AND

a signature by your school's President/CEO/Owner,followed by a signature block providing the signer's nameand job title.

(See sample letter FY 1996 Exceptional MitigatingCircumstances Appeal on the Basis of EconomicallyDisadvantaged and Placement Rates, on page 135.)

Tab-1 I

The section behind Tab 2 contains: Tab 2

O A completed EDR spreadsheet with a list of all students used tocalculate your economically disadvantaged rate. (Usespreadsheet FY 1996 Economically Disadvantaged Rate, onpage 139, or its equivalent.)

The seCtion behind Tab 3 contains: I, Tab 3

O A completed PR spreadsheet with a list of all students used tocalculate your placement rate. (Use spreadsheet FY 1996Placement Rate, on page 143, or its equivalent.)


Appeals

Important:- At this poinschools have 60 calendar daisto act.

.MoreinfaiMation'On.the. .

auditor's attetatiOn is provided,on page104.



o Within 60 calendar days of your school receivingnotification that it is subject to sanctions, mail anindependent auditor's attestation of your school'sexceptional mitigating circumstances appeal on thebasis of its economically disadvantaged andplacement rates to the Department.

o The attestation must be in the form of a letter on theindependent auditor's letterhead with

your school's name;



the auditor's opinion on management's assertionthat the information contained in the appeal iscomplete, accurate, and determined in accordancewith the Department's regulations in34 CFR § 668.17 (c)(1)(ii);

AND

the independent auditor's signature, followed by asignature block providing the signer's name and jobtitle.

(See sample letter Independent Accountant'sAttestation Report for Exceptional MitigatingCircumstances Appeal on the Basis of FY 1996Economically Disadvantaged and PlacementRates on page 144.)

If a school fails to meet the regulatory time frames forthe appeal and/or attestation, the Department will NOTreview its appeal.25 The Department's decision isfinal and no further administrative review isprovided.

25. 34 CFR § 668.1 7(c)( 1 )


141


If sent by commercial overnight mail/courier delivery, send yourschool's exceptional mitigating circumstances appeal to:





Circumstances AppealsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the information submitted with theexceptional mitigating circumstances appeal and will not considerinformation submitted afterthe regulatory deadlines. The Departmentwill send the school written notification of its decision. TheDepartment's decision is final and no further administrativereview is provided.


,The 'Department will not accept .any appeal correspondence .byfacsimile (fax)or e-maiL

The DePartment recornmendssending all correspondence returnreceipt requested:or viaCommercial 'Pvernight Mail/courier !delivery.

. .

The Department' acceptsdeliveries from commercialcouriers and/or hand del iyeriesMonday through Friday, 8:00a.m. to 4:30 p.m.(Eastern Time). .

Page 133


Page 134

U.S. Department of Health and Human Services

Poverty Levels Based on Family Size

State Year

Family Size

One person I Each additional person

Alaska 1992. $8,500 +$2,980

1993 $8,700 +$3,080

1994 $9;200

1995 $9,340 +$3,200

Hawaii 1992 $7,830 +$2,740

1993 $8,040 +$2,820

1994 $8,470 +.$2,850

1995 $8,610 +$2,940

AllbtherStates 1992

1993 $6,970 +$2,460

1994 $7,360 +$2,480

1995 $7,470 +$2,560



Our.own1212 Bell LaneLeonardtown, Wisconsin 12345-6789(123) 456-7890 Sample Letter

November 20, 1998

u.S. Department of EducationDefault Management DivisionATTN: Exceptional Mitigating CirCumstances Appeals,ROB-3, Room 3905600 IndependenceAvenue, SWWashington, DC 20202L5353

OPE ID#: [insert OPE ID#]

Subject: FY 1996 Exceptional Mitigating Circumstances Appeal on the Basis ofEconomically Disadvantaged and Placement Rates


Our Town A8A University, OPE ID # [insert OPE IDit], is sUbmitting its FY 1996 exceptionalmitigating circumstances appeal based on our economically disadvantaged and placementrates.

I, the undersigned, certify under penalty of perjury, that oureconomicallydisadvantagedrate is [insert ED rate XX.X%], our placement rate is [insert placement rate YY ym, and thatall other information submitted in support Of this exceptional mitigating circumstances appealis true and correct.

Sincerely,


144Page 135

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page

.

On

Row

5, e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

ly th

esa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

6 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

ch s

tude

nt w

how

ill b

e in

clud

ed in

you

r sc

hool

's e

cono

mic

ally

dis

adva

ntag

ed r

ate.

Col

umn

1:E

nter

the

stud

ent's

Soc

ial S

ecur

ity n

umbe

r us

ing

hyph

ens

to s

epar

ate

the

num

bers

(ex

ampl

e:00

0-00

-000

0) o

f all

of y

our

regu

lar

stud

ents

who

wer

e en

rolle

d du

ring

the

sele

cted

12-

mon

th p

erio

d.S

ort i

n nu

mer

ical

ord

er w

hen

read

y to

prin

t the

spre

adsh

eet.

Col

umn

2:E

nter

the

stud

ent's

nam

e.

Col

umn

3:E

nter

MM

/DD

/YY

YY

(m

onth

, day

, and

yea

r) to

iden

tify

the

stud

ent's

beg

inni

ng a

nd e

ndin

gen

rollm

ent d

ates

.

Col

umn

4:E

nter

X if

stu

dent

was

from

a d

isad

vant

aged

econ

omic

bac

kgro

und

durin

g th

e se

lect

ed 1

2-m

onth

perio

d. L

eave

bla

nk if

stu

dent

was

not

eco

nom

ical

lydi

sadv

anta

ged.

141

App

eagn

g E

Nce

Non

a0 I

MM

gaU

ng U

rcum

stan

ces

Bas

ed o

nth

e lE

cono

mca

[lD

y D

isad

vant

aged

Rat

eH

ow to

fill

out

FY

199

6 E

cono

mic

ally

Dis

adva

ntag

ed R

ate

spre

adsh

eet (

cont

'd)

Inst

ruct

ions

(con

t'd):

Col

umn

5:

Col

umn

6:

41

Fill

out

Col

umn

5 or

Col

umn

6 of

the

spre

adsh

eet:

For

eac

h st

uden

t fro

m a

disa

dvan

tage

d ec

onom

ic b

ackg

roun

d, p

rovi

de:

EIM

ER

the

EF

C a

nd th

e aw

ard

year

that

gen

eral

lyco

inci

de w

ith th

e se

lect

ed 1

2-m

onth

per

iod

(inC

olum

ns 5

a an

d 5b

)

OR

the

AG

I, fa

mily

siz

e, a

nd c

alen

dar

year

that

gene

rally

coi

ncid

e w

ith th

e se

lect

ed 1

2-m

onth

perio

d (in

Col

umns

6a,

6b,

and

6c)

inst

ruct

iOns

for

Box

Bllo

cate

d in

the

shad

ed-

area

):

Cou

nt th

e nu

mbe

r of

X's

that

app

ear

in C

olum

n 4.

Thi

s is

B1

in th

e ca

lcul

atio

n. R

ecor

d th

is n

umbe

r in

Box

B o

f the

Eco

nom

ical

ly D

isad

vant

aged

Rat

esp

read

shee

t.

<>

Cou

nt th

e nu

mbe

r of

stu

dent

s lis

ted

in C

olum

n 1.

The

tota

l num

ber

of s

tude

nts

will

be

B2

in th

e ca

lcul

atio

n.R

ecor

d th

is n

umbe

r in

Box

B o

f the

Eco

nom

ical

lyD

isad

vant

aged

Rat

e sp

read

shee

t.

Cal

cula

te 1

00 x

131

/B2

and

reco

rd th

e re

sult

in B

ox B

on th

e E

DR

spr

eads

heet

. Thi

s pe

rcen

tage

is y

our

scho

ol's

eco

nom

ical

ly d

isad

vant

aged

rat

e.

143

Sch

ool N

ame

OP

E ID

Num

ber

12-M

onth

Per

iod:

Sam

ple

10/1

/199

4-9/

30/1

995

Eco

nom

ical

ly D

isad

vant

aged

Rat

eF

Y 1

996

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.).,?

;

co

'4-

,---

r- "

..,,-

ViV

V-

,ac

all

No

of E

cono

mic

ally

Dis

adva

ntag

ed S

tude

nts

(fro

m C

olum

n 4)

[B1]

No

of R

egul

ar S

tude

nts

(fro

m C

olum

n 1)

[82]

Eco

nom

ical

ly D

isad

vant

aged

Rat

e [1

00 x

B1/

821

%

1. S

tude

nt's

SS

N

(sor

t in

num

eric

al o

rder

)

2. S

tude

nt's

nam

e

3. S

tude

nt's

enro

llmen

t dat

es

(fro

m M

MID

D(Y

YY

Y

to M

M/D

DIY

YY

Y)

4. If

stu

dent

qua

lifie

sas

eco

nom

ical

ly

disa

dvan

tage

d,

ente

r X

6a. I

f col

umn

4 is

mar

ked

and

econ

omic

ally

disa

dvan

tage

d is

base

d on

EF

C,

ente

r E

FC

St)

. If c

olum

n 6a

has

an E

FC

,

ente

r E

FC

's

awar

d ye

ar

6a If

col

umn

4 Is

mar

ked

and

econ

omic

ally

disa

dvan

tage

d is

base

d on

AG

I,

ente

r A

GI

6b If

col

umn

6aha

s an

AG

I, en

ter

fam

ily s

ize

6e If

col

umn

6aha

s an

AG

I,

ente

r ca

lend

ar

year

111-

11-1

111

Jane

Sm

ith3/

15/1

994-

3/10

/199

519

94/1

995

222-

22-2

222

John

Doe

6/16

/199

4-10

/311

995

'$4,

200

1993

333-

33-3

333

Chr

is J

onet

'12

/15/

1994

-3/4

/199

5

149

t,,s4

MM

/DD

/YY

YY

[sen

d to

U.S

. Dep

artm

ent o

f Edu

catio

n]

rri

.6*

0 "ta. 'S co

ofpa

ges

g

App

eal [

mg

Exc

eptio

nAM

tth a

rcum

stan

ces

Bas

ed o

n th

ePO

acem

ent R

ate

How

to f

ill o

ut F

Y 1

996

Plac

emen

tR

ate

spre

adsh

eet

Cou

nt a

nd li

st th

e st

uden

ts w

ho w

ill b

ein

clud

ed in

the

calc

ulat

ion

of

your

sch

ool's

pla

cem

ent r

ate

usin

g a

spre

adsh

eet s

oftw

are

appl

icat

ion

such

as

Lotu

s 1-

2-3,

Sup

erca

lc, o

rExc

el. T

he r

esul

ting

spre

adsh

eet m

ust b

e se

nt to

the

Dep

artm

ent.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e (h

oriz

onta

l) la

yout

. A s

ampl

esp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.

Hea

der:

Foo

ter:

Ent

er F

Y 1

996

Pla

cem

ent R

ate

in th

e ce

nter

of th

ehe

ader

are

a. In

the

left-

hand

are

a, e

nter

you

rsc

hool

's n

ame,

you

r sc

hool

's O

PE

IDnu

mbe

r, a

nd

your

sch

ool's

sel

ecte

d12

-mon

th p

erio

d.

You

mus

t use

the

sam

e 12

-mon

th p

erio

d as

on

Not

eth

e ec

onom

ical

ly d

isad

vant

aged

spre

adsh

eet.

Ent

er th

e da

te th

e ap

peal

was

pre

pare

d in

the

left

side

of t

he fo

oter

are

a. S

et u

p au

tom

atic

pagi

natio

nin

the

right

sid

e of

the

foot

er a

rea

so th

atth

esp

ecifi

c pa

ges

and

the

tota

l num

ber

of p

age

num

bers

sho

w o

n ea

ch p

age

(exa

mpl

e: p

age

1 of

10 p

ages

).

On

Row

s 1,

2, 3

, and

4 u

se th

e dr

aw to

olto

dra

w a

rec

tang

le

cove

ring

lines

Al t

o J4

. Usi

ng th

e te

xt-b

oxto

ol, d

raw

ano

ther

box

for

Box

C in

form

atio

n. In

this

box

, ent

er th

enu

mbe

r of

stu

dent

s

succ

essf

ully

pla

ced

(fro

m C

olum

n 7)

[C1]

, the

num

ber

of e

ntrie

s

liste

d in

Col

umn

1 [C

2], a

nd y

our

scho

ol's

plac

emen

t rat

e [1

00 x

C1/

C2]

. See

the

inst

ruct

ions

for

Box

Cin

form

atio

n on

the

follo

win

g

page

.

151

On

Row

5, e

nter

exa

ctly

the

sam

eco

lum

n na

mes

in e

xact

ly th

e

sam

e or

der

as li

sted

on

the

sam

ple

spre

adsh

eet.

On

Row

6 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

ch s

tude

nt w

ho

will

be

incl

uded

in y

our

scho

ol's

plac

emen

t rat

e.

Col

umn

1:

Col

umn

2:

Col

umn

3:

Col

umn

4:

Col

umn

5:

Col

umn

6:

Ent

er th

e st

uden

t's S

ocia

l Sec

urity

num

ber

usin

g

hyph

ens

to s

epar

ate

the

num

bers

(exa

mpl

e:00

0-00

-000

0) o

f all

of y

our

regu

lars

tude

nts

who

mee

t

the

cond

ition

s id

entif

ied

on p

age

123.

Sor

t in

num

eric

al o

rder

whe

n re

ady

to p

rintt

he s

prea

dshe

et.

Ent

er th

e st

uden

t's n

ame.

Ent

er e

ach

stud

ent's

add

ress

.

Ent

er e

ach

stud

ent's

pro

gram

of s

tudy

. Do

not u

se

abbr

evia

tions

.

Ent

er M

M/D

D/Y

YY

Y (

mon

th, d

ay,a

nd y

ear)

to

iden

tify

the

date

that

eac

h st

uden

t was

orig

inal

ly

sche

dule

d, a

t the

tim

e of

enr

ollm

ent,

to c

ompl

ete

his

or h

er p

rogr

am o

f stu

dy.

Ent

er M

M/D

D/Y

YY

Y (

mon

th, d

ay,a

nd y

ear)

to

iden

tify

the

begi

nnin

g an

d en

ding

dat

esof

the

stud

ent's

enr

ollm

ent. 15

2

App

ealin

g E

mce

pWne

D1M

gath

g ar

rcum

stan

ces

Bas

ed o

n th

e Pl

acem

ent

Re%

How

to f

ill o

ut F

Y 1

996

Plac

emen

t Rat

esp

read

shee

t (co

nt'd

)

Col

umn

7:E

nter

X if

the

stud

ent w

as s

ucce

ssfu

lly p

lace

din

em

ploy

men

t acc

ordi

ng to

at l

east

one

of th

efo

llow

ing

two

cond

ition

s. L

eave

bla

nk if

at l

east

one

cond

ition

was

not

met

.

(1)

A s

tude

nt is

suc

cess

fully

pla

ced

if he

orsh

e is

em

ploy

ed in

an

occu

patio

n fo

r w

hich

your

scho

ol p

rovi

ded

trai

ning

on

the

day

follo

win

g12

mon

ths

afte

r th

e da

te o

f the

stu

dent

's la

stda

y of

atte

ndan

ce a

t you

r sc

hool

,

OR

(2)

A s

tude

nt is

suc

cess

fully

pla

ced

if he

orsh

e w

as e

mpl

oyed

in a

n oc

cupa

tion

for

whi

chyo

ur s

choo

l pro

vide

d tr

aini

ng fo

r at

leas

t13

wee

ks b

efor

e th

e da

y fo

llow

ing

12 m

onth

s af

ter

the

date

of t

he s

tude

nt's

last

day

of

atte

ndan

ce a

t you

r sc

hool

.

A s

tude

nt c

anno

t be

coun

ted

as s

ucce

ssfu

llypl

aced

acc

ordi

ng to

eith

er o

f the

se tw

oco

nditi

ons

if yo

ur s

choo

l is

the

empl

oyer

.

Col

umei

8:

Ent

er th

e M

M/D

D/Y

YY

Y to

iden

tify

the

begi

nnin

g an

d en

ding

dat

es o

f the

em

ploy

men

tth

at q

ualif

ies

as s

ucce

ssfu

l pla

cem

ent.

(If t

hest

uden

t is

still

em

ploy

ed b

y th

esa

me

empl

oyer

,en

ter

MM

/DD

/YY

YY

to p

rese

nt.)

153

Col

umn

9:

Col

umn

10:

Ent

er th

e st

uden

t's jo

b tit

le in

the

empl

oym

ent

that

qual

ifies

as

succ

essf

ul p

lace

men

t. D

o N

OT

use

abbr

evia

tions

."

Ent

er th

e na

me,

add

ress

, and

tele

phon

e nu

mbe

r of

the

empl

oyer

with

whi

ch th

e st

uden

t was

suc

cess

fully

plac

ed.

Ons

truc

tions

for

Box

C (

loca

ted

in th

esh

aded

are

a):

0 C

ount

the

num

ber

of X

s th

at a

ppea

r in

Col

umn

7. T

he to

tal

num

ber

of X

s w

ill b

e C

1 in

the

calc

ulat

ion.

Rec

ord

this

num

ber

in B

ox C

on

the

PR

spr

eads

heet

. Thi

s is

the

num

ber

ofst

uden

ts w

ho w

ere

succ

essf

ully

pla

ced

in e

mpl

oym

ent.

0 C

ount

the

num

ber

of s

tude

nts

liste

d in

the

PR

spr

eads

heet

byco

untin

g th

e nu

mbe

r of

ent

ries

in C

olum

n 1.

The

tota

l num

ber

of s

tude

nts

will

be

C2

in th

e ca

lcul

atio

n. R

ecor

dth

is n

umbe

rin

Box

C in

the

PR

spr

eads

heet

. Thi

s is

the

num

ber

ofst

uden

ts th

at w

ere

sche

dule

d to

com

plet

e th

eir p

rogr

ams

durin

g th

e se

lect

ed 1

2 m

onth

per

iod.

pC

alcu

late

100

x C

l/C2

and

reco

rd th

e re

sult

in B

oxC

on

the

PR

spr

eads

heet

. Thi

s pe

rcen

tage

isyo

ur s

choo

l'spl

acem

ent r

ate.

154

Sch

ool N

ame

OP

E ID

Num

ber

12-M

onth

Per

iod:

Sam

ple

10/1

/199

4-9/

30/1

995

FY 1

996

Plac

emen

t Rat

e

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.)

...

,-

.

BM

&N

o. o

f Stu

dent

s S

ucce

ssfu

lly P

lace

d (f

rom

col

umn

7) p

l]N

o. o

f Stu

dent

s O

rigin

ally

Sch

edul

ed to

Com

plet

e P

rogr

ams

(fro

mco

lum

n 1)

(C

2]

Pla

cem

ent R

ate

(100

x C

11C

2]%

1. S

tude

nt's

SS

N

(sor

t in

num

eric

al o

rder

)

2. S

tude

nt's

nam

e

,

3. S

tude

nt's

addr

ess

4. S

tude

nt's

prog

ram

of s

tudy

(do

NO

T u

se

abbr

evia

tions

)

6. D

ate

that

stud

ent w

as

orig

inal

ly

sche

dule

d to

com

plet

e

prog

ram

of

stud

y

mlw

arry

yy

6. S

tude

nt's

enro

llmen

t

date

s

(fro

mLi

woo

rrm

to M

M/D

DA

ITY

)

7. If

stu

dent

was

succ

essf

ully

plac

ed In

empl

oym

ent,

ente

r X

8. If

stu

dent

was

succ

essf

ully

pla

ced,

prov

ide

begi

nnin

g

and

endi

ng d

ates

of e

mpl

oym

ent

(fro

m M

MID

D/Y

YY

Y

to M

WD

EV

YW

Y)

9. If

stu

dent

was

succ

essf

ully

pla

ced,

prov

ide

stud

ent's

job

title

(do

NO

T u

se

abbr

evia

tions

)

10. I

f stu

dent

was

succ

essf

ully

pla

ced,

prov

ide

empl

oyer

's n

ame

addr

ess,

and

phon

e nu

mbe

r

1 1

1-1

1-1

1 1

1Ja

ne S

mith

is o

ck o

r.

Pho

enix

, AZ

.111

11

Cos

met

olog

y4/

1511

995

3/15

/199

4-3/

10/1

995

-1

X:

4/10

/199

5-pr

esen

tH

air

Sty

list

Jane

s B

eaut

y S

hop

30 F

irst L

ane

Pho

enix

. AZ

555

55

(888

) 55

5-11

11

333-

33-3

333

Chr

is J

ones

10.,

Etr

n D

r.

Lusb

y, M

O 2

2222

Cos

met

olog

y. :*

9/15

/199

512

/15/

1994

-3/

4/19

95

,

444-

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December 15, 1998

bepaetment of'EducationDefault Managethent DivisionATIN: ExceptionatMitigating Circumstances AppealsROB 3, Room 3905600 Independence Avenue, SW'Washington, DC 20202-5353

..GLOB'AL UNIT121,2 jna*-8tileet:Dunkirk, Mailrie 111-2222-

: .(11-1)-111-1`11-1


Sample

&EA*: ;Eine'er OPE /Dm

Subject: Independent Accountant's Attestation Report for Exceptional Mitigating CircumstancesAppeal on the Basis of FY 1996 Economically Disadvantaged and Placement Rates.

We.have examined management's aSsertion included in itsTepreseritationfetter dated, [insert date],stating that the information contained in [insert school's name]'s OPE ID it [insert OPE ID#],eicceOtionalmitigating 'circumstances appeal baSed on its economically,disadvantaged and Placernent rates,:iScomplete, accurate and determined in acCordance with the requirements of 34 CFR§,668.17(c).; Asdiscussed in thatrepresentation letter, management is responsible for [insert school's haMe]'s, 1

compliance with those requirement& Our responsibility is tO express an Opinion on managements -assertion about the institution's coMpliance based on our examination:

Our exarnination was made in'aOcOrdande with'stahdards established by the AmeriCan Institute, ofCertified publicAccountants and; aCCOrdingly, incliidedexarnining, on a test basis, evidence about[insert SChools name]'s complianCe with 34',CFR § 668.:17(c) andvertorMing,tUcti'other procedure&Ot we considered neceisary intie aircuenstances.. 'We belieVe oUrekarninatiomprovidesreasonable:basis for our opinion. Our examination doeenotprovidelegal determination on:[in'thri School's .

flame]'s-compliance with specified requirements:

In burbpiniOnfrianagement's assertion that theinforMation contained in [insert School's nine]'sappeal, dated [insert date] whichr reports that [insert school's harne]tiasameconomically'"disadvantaged rate ot[inserVEDR XXX %] and a,placement rate of [inSert,P,R. Yy.r.ro] for the twelye-Month Period beginning on [insert MWDDNYYY] and ending On. [insertMWPDlyyYY] is complete, .

acCurate;nd,determined in accOrdance with the requirernents set forth in -34 CFR§668.17(c), is fairly Stated, in all material respects.

This rePiiiiiintendedSoiely;6'r theinformation:Of!an audit committee, management, andlheDepartment of Education However, this report is a matter of pUblic record and its'distributidn is

not limited.

Respectfully submitted; ;

; 7/47,4 Sow%MarY Smith, ODAPresident, Global Accounting, Inc.

Page 144

1 5 7


Appeals

EconamilcailllyDilsadvanftgedand Comp lleVon Rages Cr Mafia


To file an exceptional mitigating circumstances appeal based oneconomically disadvantaged and completion rates, your school

must:

* be subject to sanctions,

AND

be a degree-granting school,26

AND

* demonstrate that 70.0 percent or more of its regular studentsenrolled during a selected 12-month period were individuals

who came from disadvantaged economic backgrounds,27

AND

demonstrate that 70.0 percent or more of its regular studentswho were initially enrolled on a full-time basis and who wereoriginally scheduled to complete their programs during the

same 12-month period identified above either:

received degrees, or

transferred to higher level programs, or

at the end of the 1 2-month period, remained enrolledand were making satisfactory academic progress(SAP) toward completion of their educationalprograms.28

The checklist on the next page summarizes the eligibility criteria for anexceptional mitigating circumstances appeal based on economicallydisadvantaged and completion rates. Review thechecklist todetermine your school's eligibility to appeal on the basis ofexceptional mitigating circumstances.

26. 34 CFR § 668.17(c)(1)(ii)(B)(/)27. 34 CFR § 668.17(c)(1)(ii)(B)28. 34 CFR § 668.17(c)(1)(ii)(B)(/)


If you are not sure whetheryour school is claSsifieths adegree-grantingor non-degree-granting school, please refer toyour schoorsEligibility andCertification Approval Reportgenerated by the Department'sCase Management Division.The telephone number for theCase Management Division is(202) 205-0183.

A school must select a12-month period that has astan date that is no earlierthan April 2, 1994 and nolater than October 1, 1994.

See page 102 for furtherinformation on selecting a12-month period.

Page 145

Appeals

These appeatcriteria are onlyfor degtee-granting schools.

Page 146


Emcept[onall NtiligangUrcumstances Appeal]

Eased onEcononacally Msadvantaged

and ConwMon RatesalgUlity Checklist

To be eligible to appeal based on its students' economicallydisadvantaged rate and completion rate, your school must meetthe following criteria:

ID Your school is subject to one of the following sanctions

() initial FFEL Program and/or Direct Loan Programloss

OR

3 extended FFEL Program and/or Direct LoanProgram loss

AND/OR

(7) possible action to limit, suspend:or terminate (LS&T)eligibility of all Title IV student financial assistanceprograms.

Your school is a degree-granting school that

() enrolls 70.0 percentor more of its students fromdisadvantaged economic backgrounds as describedin 34 CFR § 668.17(c)(1)(ii)(B)

AND

(3 can demonstrate that 70.0 percent or more of itsstudents completed their programs as defined in34 CFR § 668.17(c)(1)(ii)(B)(1)

159



Flow do 0 ca0cullate t ie econom0caililyd0sadvantaged rate and the comp0e1t0on rate?

The economically disadvantaged rate (EDR)29 is the following

percentage:

100

number of regular students enrolled during the selected12-month period who had an EFC of zero or AGI less

thaRthe HHS poverty level [B1]

number of regular students enrolled during theselected 12-month period [B2]

NoteInformation on how to seleCt an acceptable 1-2-month

period is on page 102. ,

The completion rate (CR)3° is the following percentage:

100

number of regular students, initially enrolled on a full-

time basis and originally scheduled to complete theirprograms during the selected 12-month period, who

either(1) received degrees, or

(2) transferred to higher level programs, or

(3) at the end of the 12-month period, remainedenrolled and were making satisfactory academicprogress toward completion of their educationalprograms [D1]

number of regular students who were initially enrolled

on a full-time basis and were originally scheduled tocomplete their programs during the selected 12-month

period [D2]

29. 34 CFR § 668.17(c)(1)(ii)(B)30. 34 CFR § 668.17(c)(1)(ii)(B)(/)

FY 1996 Official Cohort Default Rate Guide IGO

EFC. Expected FamilyCOntribution

AGI AdjuSted Gross:,Income

HHS U.S. Departmenj 1Of Flealtfrand HumanServices (For povertylevel guidelines, see page

157)

Your school must use the same12-month period for calculatingboth rates.

Page 147


Refer to the beginning of thissection for a detailed discussionregarding which scheols areeligible to appeal based on theeconomically disadvantaged and

compieti*Kakes-

A "regular student" is defined asa person who is enrolled, oraccepted for enrollment, in aneligible program at an eligiblepostsecondary institution forthe purpose of obtaining adegree, certificate, or otherrecognized educational credentialoffered by that institution asdefined m-34 CFR C600.2

In your list of "regularstudents" you must includestudents who:

began enrollment before the12-month period and endedenrollment during or afterthe 12-month period,

AND/OR


Page 148

To succeed on an exceptional mitigating circumstances appeal on thebasis of your school's economically disadvantaged and completionrates, your school must have an economically disadvantaged rate of70.0 percent or greater and a completion rate of 70.0 percent orgreater.

aow does my schmoll prepare and sambmK aneNceptiona0 n.flVgathlg drcumstaRces appeal°based on its economcaHy dsadvantaged andcomplleUon rates to the Department?Step 1: Review your school's official cohort default rate notification

letter and this Guide to determine if your school is eligibleto submit an exceptional mitigating circumstances appealbased on its economically disadvantaged and completionrates.

Step 2: Calculate and list the following data to support yourschool's economically disadvantaged rate.

O Use the spreadsheet FY 1996 EconomicallyDisadvantaged Rate (EDR) on page 161 or itsequivalent to count and list the students who will beincluded in the calculation ofyour school's economicallydisadvantaged rate.

O On the EDR spreadsheet, fill out your school's nameand OPE ID Number.

Select an acceptable 12-month period and enter it onthe EDR spreadsheet (see page 102 for details onselecting an acceptable 12-month period).

Fill out Column 1 of the EDR spreadsheet: innumerical order, list the Social Security numbers of allyour regular students enrolled during any part of theselected 12-month period. No student will becounted more than once in the calculation.

Fill out Column 2 of the EDR spreadsheet: foreachSocial Security number, list the student's name.

O Fill out Column 3 of the EDR spreadsheet: foreachstudent, provide beginning and ending enrollmentdates. For all enrollmentdates, include the month,date, and year (MM/DD/YYYY).

161



Fill out Column 4 of the EDR spreadsheet: if the

student was from an economically disadvantagedbackground during the selected 12-month period, asdescribed below, enter X. (If not, leave blank.)

If you enter X for a student in Column 4, either

(1) :he student must have an EFC of zero for any awardyearthat generally coincides with the 12-month

period,

OR

(2) the student and, if applicable, his or her parents orspouse must have an adjusted gross income (AGO

less than the Health and Human Services (HHS)poverty levels for any calendar yearthatgenerallycoincides with the 12-month period. The HHSpoverty levels are shown on page 157.

EFC TEST

To determine whether a student qualifies aseconomically disadvantaged under the EFC test, firstidentify which award years overlap by at least one day

with your school's selected 12-month period. If thestudent had a zero EFC in any of the overlapping awardyears, he or she qualifies as economicallydisadvantaged. For example:

(.... Selected 12-month period: April 2, 1994 to April 1,

1995

Acceptable (overlapping) award years: 1993-1994

or 1994-1995

AGII TEST

If the student does not qualify based on EFC, he or she

may still qualify based on AG I. To determine if thestudent is economically disadvantaged on the basis ofthe AGI test, identify which calendar years could beused to determine an EFC for award year that"generally coincides" with the selected 12-month period.


An award year begins on July 1and ends on June 30. The1993-1994 award year began

July 1993 and ended

June 30, 1994.

A award year "generallycoincides" with a 12-monthperiod if they overlap by at leastone day.

Q. What if a student

has an EFC of zero, but theaward year does notoverlap the 12-monthperiod?

The student is not

considered economicallydisadvantaged unless he orshe has a qualifying AGIthat generally coincideswith the 12-month period.

A calendar year "generallycoincides" with a 12-monthperiod if the calendar yearassociated with the AGI couldhave been used to determine astUdent's EFC for an award yearthat "generally coincides" with a127month period chosen by the

school.

Page 149

AppealsExceptional Mitigating CircumstancesAppeal

To determine accePtable calendaryears, firSideterrnine accepti4leaward years.

Students with an EFG: of Fromust have an award yeaeliStedon the spreadsheet toincluded in the numerator of thecalculation.

A student with an AGI thatmeets the poverty threshold.must have a family size and.calendaryear listed on thespreadsheet to be includetrinthenumerator of the calculation.

Page 150

If the student and, if applicable, his or her parents orspouse had an AGI below the HHS poverty level in anyof the acceptable calendar years, the student qualifiesas economically disadvantaged underthe AGI test. Forexample:

Selected 12-month period: October 1, 1994 toSeptember 30, 1995


4, Acceptable calendar years: 1993, 1994, 1995

NoteThe 1993, 1994 and 1995 calendar years areacceptable calendaryears because the 1993and/or 1994 calendar year could be used todetermine an EFC for the 1994/1995 awardyear. The 1994 and/or 1995 calendaryear couldbe used to determine an EFC for the 1995/1996award year.

O Fill out Column 5 or Column 6 of the EDR spreadsheet:for each student from a disadvantaged economicbackground, provide:

EITHER

the EFC and the award year that generallycoincides with the selected 12-month period (inColumns 5a and 5b)

OR

the AGI, family size, and calendar year thatgenerally coincides with the selected 12-monthperiod (in Columns 6a, 6b, and 6c)

o Complete Box B by counting the number of Xs thatappear in Column 4. The total number of Xs will be B1in the calculation. Record this number in Box B on theEDR spreadsheet.

o Count the total number ofstudents listed in the EDRspreadsheet by counting the number of entries inColumn 1. The total numberof students will be B2 inthe calculation. Record this number in Box B on theEDR spreadsheet.

6 3



O Calculate 100 x B1/32 and record the result in Box B

on the EDR spreadsheet. This percentage is yourschool's economically disadvantaged rate.

As part of a successful appeal, your school'seconomically disadvantaged rate must be70.0 percentor.greater.

Step 3: Calculate and list data to support your school's completion

rate.

O Use the spreadsheet FY 1996 Completion Rate (CR)located on page 165 or an equivalent to count and listthe students who will be included in the calculation ofyour school's completion rate.

* On the CR spreadsheet, fill out yourschool's name and

OPE ID Number.

o Enter and use the same 12-month period as on theFY 1996 Economically Disadvantaged Ratespreadsheet.

o Fill out Column 1 of the CR spreadsheet: in numericalorder, list the Social Security numbers of all yourstudents who meet the following conditions:

4,;) regular students who were initially enrolled on a full-time basis at your school

AND

at the time of their enrollment, were originallyscheduled to complete their programs during theselected 12-month period.

No student will be counted more than once in thecalculation.

o Fill out Column 2 of the CR spreadsheet: for eachSocial Security number, list the student's name.

o Fill out Column 3 of the CR spreadsheet: provide eachstudent's program of study. Do not use abbreviations.

31. 34 CFR § 668.17(c)(2)


164

A "regular student" is defined asa person who is enrolled, oraccepted fcir enrollment, in aneligible program at an eligiblepostsecondary institution forthe purpose of obtaining adegree, certificate, or otherrecognized educational credentialoffered by that institution asdefined in 34 CFR § 600.2.

The "scheduled to complete"date will be based on the amountof time normally required by afull-time student to completethe program, as specified in theschool's enrollment contract,catalog, or other materials.31

Page 151

Appeals

All dates included in.the CR,spreadsheet nuist include month,day; and year.


* Fill out Column 4 of the CR spreadsheet: provide thedate that each studentwas originally scheduled, at thetime of enrollment, to complete his or her program ofstudy.

Fill out Column 5 of the CR spreadsheet: for eachstudent, provide beginning and endingenrollmentdates.

Fill out Column 6 of the CR spreadsheet: if the studentmeets one of the following three successfulcompletion conditions, enter X. (Ifnot, leave blank.)

(1) The student received a degree at your school.

OR

(2) The student transferred from your school to a higherlevel educational program.

OR

(3) The student remained enrolled at your school at theend of the selected 12-month period and wasmaking satisfactory academic progress (SAP)toward completion of his or her educationalprogram.

* Fill out Column 7 of the CR spreadsheet: if a studentreceived a degree from your school, provide the datethe degree was received.

Fill out Column 8a of the CR spreadsheet: if a studenttransferred to a higher level educational program,provide the date the student transferred.

O Fill out Column 8b of the CR spreadsheet: for eachstudent with information listed in Column 8a, provide thename and address of the school to which he orshe transferred.

o Fill out Column 8c of the CR spreadsheet: for eachstudent with information listed in Column 8a, providethe name of the higher leveleducational program towhich he or she transferred. Do not useabbreviations.


165


Fill out Column 9 of the CR spreadsheet: for eachstudent who at the end of the selected 12-month periodremained enrolled and was making satisfactoryacademic progress, enter X.

Complete Box D by counting the number of Xs thatappear in Column 6. The total number of Xs will be D1

in the calculation. Record this number in Box D on theCR spreadsheet. This is the number of students whohave successfully met completion conditions.

o Count the total number of students listed in the CRspreadsheet by counting the number of entries inColumn 1. The total number of students will be D2 inthe calculation. Record this number in Box D on the CRspreadsheet. This is the number of students originallyscheduled to complete their programs during theselected 12-month period.

Calculate 100 x Di / D2 and record the result in Box Don the CR spreadsheet. This percentage is yourschool's completion rate.

Step 4:

As part of a successful appeal, your completion ratemust be 70.0 percent or greater.

Submit your properly completed exceptional mitigatingcircumstances appeal based on economicallydisadvantaged and completion rates.

O Within 30 calendar days of your school receivingnotification that it is subject to sanctions, mail yourexceptional mitigating circumstances appeal to theDepartment.

O The Department recommends that your school submitits properly completed exceptional mitigatingcircumstances appeal in a single, tabbed report binder,and mail it return receipt requested or via overnightdelivery.

The recommended tabs and materials are shown on thEnext page.

Important At this'point4",schools have 30 calendar daysto, act


16G



0 A letter on your school's letterhead with


a statement indicating that your school is submitting anexceptional mitigating circumstances appeal based onyour economically disadvantaged rate and yourcompletion rate;


a certification statement that all information in the appealis true and correct. See 34 CFR § 668.17(c)(6);

AND

a signature by your school's President/CEO/Owner,followed by a signature block providing the signer's nameand job title.

(See sample letter FY 1996 Exceptional MitigatingCircumstances Appeal Based on EconomicallyDisadvantaged and Completion Rates, on page 158.)

Tab 1

The section behind Tab 2 contains: ab 20 A completed EDR spreadsheet with a list of all students used to

calculate your economically disadvantaged rate. (Usespreadsheet FY 1996 Economically Disadvantaged Rate, onpage 161, or its equiv*alent.)


A completed CR spreadsheet with a list of all students used tocalculate your completion rate. (Use spreadsheet FY 1996Completion Rate, on page 165, or its equivalent.)

aly 3:


167



Within 60 calendar days of your school receivingnotification that it is subject to sanctions, mail anindependent auditor's attestation of your school'sexceptional mitigating circumstances appeal based onits economically disadvantaged and completion rates to

the Department.

° The attestation should be in the form of a letter on theindependent auditor's letterhead with-

yourschool's name;



the auditor's opinion on management's assertionthat the information contained in the appeal iscomplete, accurate, and determined in accordancewith the Department's regulations in34 CFR § 668.17 (c)(1)(ii).

AND

the independent auditor's signature, followed by asignature block providing the signer's name and jobtitle.

(See sample letter Independent Accountant'sAttestation Report for Exceptional MitigatingCircumstances Appeal Based on FY 1996Economically Disadvantaged and CompletionRates, on page 166.)

If a school fails to meet the regulatory time frames for the appeal and/or attestation, the Department will NOT review its appeal.32 TheDepartment's decision is final and no further administrativereview is provided.

32. 34 CFR § 668.17(c)(1)


Important At this point,schools have 60 calendar daysto act.

More information on theauditor's-attestation is providedon page 104

Page 155

Appeals


The Department recommendssending all correspondence returnreceipt requested or viacommercial overnight mail/courierdel ivety.

The Department acceptsdeliveries from commercialcouriers and/or hand deliveriesMonday through Friday, 8:00a.m. to 4:30 p.m.(Eastern Time).


K sent by commercial overnight mail/courier delivery, send yourschool's exceptional mitigating circumstances appeal to:





Circumstances AppealROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

The Department will review only the information submitted with theexceptional mitigating circumstances appeal and will not considerinformation submitted after the regulatory deadlines. The Departmentwill send the school written notification of its decision. TheDepartment's decision is final and no further administrativereview is provided.


169


U.S. Department of Health and Human Services

Poverty Levels Based on Family Size

State Year

Family Size

One person Each additional person

Alaska 1992 -$8;500 . +$2,980

1993 $8,700 +$3,080

1994 $9,200 '43,100

1995 $9,340 43,200

Hawaii 1992 $7,830 ,+$2,740,'

1993 $8,040 +$2,820

1994 $8,470 42;850

1995 $8,610 +$2,940

All Other, StateS .' -,1992,' $6,810

,

+$2,380

1993 $6,970 +$2,460

1994 $7,360 +$2,480

1995 $7,470 +$2,560



Ur: 0,21'2:-,.0el(Larte

LeojiircitpWni;TVVistoi*n- -12345-6789,0231:-466-7896'

niversity

Sample LetterNovernber 20, 1998

'U.S. bepartmept bf EdUcationDefault Managernent biVisionATTN: Exceptional Mitigating CirtumstancesAppealsROB-3, RooM 3905600 IndependenceAvenue, SWWashington, bC 20262-5353

OPE ID#: [insert OPE IDit]

Subject: FY 1996 Exceptional Mitigating Circumstances Appeal Based onEconomically Disadvantaged and Completion Rates

To Whom It May Concern:-

Our Town A&M University, OPE ID # [insert OPE lanis subrnitting its FY 1996 excePtionalmitigating ciMumstances appeal based on Our economicallydisadVantaged and completionrates:

I, the u ndersigned, certify Underpénalty of PerjurY;thatour economiCaliydisadvantagedrate is linsert ED rate XX.X*, our completion rate is [insert completion rate YY Y%], andthat all other information stibmitted in Support-bt this exceptional mitigating circumstances. ,

appeal is true and Ctirrect.,

Sincerely,

DoeJohnDoe, PresidentOur Town A&M University

EnclosUres

Page 158

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4:E

nter

X if

stu

dent

was

from

a d

isad

vant

aged

econ

omic

bac

kgro

und

durin

g th

e se

lect

ed 1

2-m

onth

perio

d. L

eave

bla

nk if

stu

dent

was

not e

cono

mic

ally

disa

dvan

tage

d.

172

173

App

ealin

g la

cept

kma0

WiN

gaU

ng C

hocu

mst

ance

sE

ased

on

the

Eco

nom

[cal

iy M

eadv

anta

ged

Rat

eI-

low

to f

ill o

ut F

Y 1

996

Eco

nom

ical

lyD

isad

vant

aged

Rat

e sp

read

shee

t (co

nt'd

)

Inst

ruct

ions

(co

n't)

Col

umn

5:

Col

umn

6:

Fill

out

Col

umn

5 or

Col

umn

6 of

the

spre

adsh

eet:

For

eac

h st

uden

t fro

m a

dis

adva

ntag

ed e

cono

mic

back

grou

nd, p

rovi

de:

EIM

ER

the

EF

C a

nd th

e aw

ard

year

that

gen

eral

lyco

inci

de w

ith th

e se

lect

ed 1

2-m

onth

per

iod

(in C

olum

ns 5

a an

d 5b

)

OR

the

AG

I, fa

mily

siz

e, a

nd c

alen

dar

year

that

gene

rally

coi

ncid

e w

ith th

e se

lect

ed 1

2-m

onth

perio

d (in

Col

umns

6a,

6b,

and

6c)

Inst

ruct

ions

for

Box

B (

loca

ted

ih th

e sh

aded

irea)

:

OC

ount

the

num

ber

of X

's th

atap

pear

in C

olum

n 4.

Thi

s is

B1

in th

e ca

lcul

atio

n. R

ecor

d th

is n

umbe

r in

Box

B o

f the

Eco

nom

ical

ly D

isad

vant

aged

Rat

e

spre

adsh

eet.

Cou

nt th

e nu

mbe

r of

stu

dent

s lis

ted

in C

olum

n 1.

The

tota

l num

ber

of s

tude

nts

will

be

B2

in th

e ca

lcul

atio

n.R

ecor

d th

is n

umbe

r in

Box

B o

f the

Eco

nom

ical

lyD

isad

vant

aged

Rat

e sp

read

shee

t.

OC

alcu

late

100

x B

1/13

2 an

d re

cord

the

resu

lt in

Box

Bon

the

ED

R s

prea

dshe

et. T

his

perc

enta

ge is

your

scho

ol's

eco

nom

ical

ly d

isad

vant

aged

rat

e. 17,5

"LI

Sch

ool N

ame

OP

E ID

Num

ber

12-M

onth

Per

iod:

Sam

ple

4/2/

1994

-4/1

/199

5

FY

199

6

Eco

nom

ical

ly D

isad

vant

aged

Rat

e

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.)ab

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dent

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rom

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nom

ical

ly D

isad

vant

aged

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3. S

tude

nt's

enro

llmen

t dat

es

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m M

WD

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YY

Y

to M

M/D

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umn

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ate

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x B

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2]

, ...

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1. S

tude

nt's

SS

N

(sor

t in

num

eric

al o

rder

)

2. S

tude

nt's

nam

e

4. If

stu

dent

qua

lifie

sas

eco

nom

ical

ly

disa

dvan

tage

d,en

ter

X

Ga.

If c

olum

n 4

ism

arke

d an

d

econ

omic

ally

disa

dvan

tage

d is

base

d on

EF

C,

anth

r E

FC

6b. I

f col

umn

5aha

s an

EF

C,

ente

r E

FC

's

awar

d ye

ar

6a. I

f col

umn

4 is

mar

ked

and

econ

omic

ally

disa

dvan

tage

d is

base

d on

AG

I,

ente

r A

GI

6b. I

f col

umn

6aha

s an

AG

I, en

ter

fam

ily s

ize

6c.I

f col

umn

6aha

s an

AG

I,

ente

r ca

lend

ar

year

111-

11-1

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Jon

es1/

15/1

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1/10

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5X

019

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222-

22-2

222

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es S

mith

5/16

/199

4-7/

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.'

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,,

-$2

,500

119

93

333-

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333

Jane

Joh

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444

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YY

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d to

U.S

. Dep

artm

ent o

f Edu

catio

n]P

age

ofpa

ges

177

App

seD

Ing

Non

a M

IUga

tilng

Urc

umst

ance

sE

ased

on

this

Com

pMon

Rat

sH

ow to

fill

out

FY

199

6 C

ompl

etio

n R

ate

spre

adsh

eet

Cou

nt a

nd li

st th

e st

uden

ts w

ho w

ill b

e in

clud

ed in

the

calc

ulat

ion

ofyo

ur s

choo

l's c

ompl

etio

n ra

te a

ppea

l usi

ng a

spr

eads

heet

sof

twar

eap

plic

atio

n su

ch a

s Lo

tus

1-2-

3, S

uper

calc

, or

Exc

el. T

he r

esul

ting

spre

adsh

eet m

ust b

e se

nt to

the

Dep

artm

ent.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e (h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.

Hea

der:

Foo

ter:

Ent

er F

Y 1

996

Com

plet

ion

Rat

e in

the

cent

er o

fth

e he

ader

are

a. In

the

left-

hand

are

a, e

nter

you

rsc

hool

's n

ame,

you

r sc

hool

's O

PE

ID n

umbe

r, a

ndth

e ac

cept

able

12-

mon

th p

erio

d.

You

mus

t use

the

sam

e 12

-mon

th p

erio

d as

on

the

econ

omic

ally

dis

adva

ntag

ed r

ate

spre

adsh

eet.

Ent

er th

e da

te th

e ap

peal

was

pre

pare

d in

the

left

side

of t

he fo

oter

are

a. S

et u

p au

tom

atic

pag

inat

ion

in th

e rig

ht s

ide

of th

e fo

oter

are

a so

the

spec

ific

page

num

ber

and

the

tota

l num

ber

of p

age

num

bers

show

on

each

pag

e (e

xam

ple:

pag

e 1

of 1

0 pa

ges)

.

On

row

s 1,

2, 3

, and

4 u

se th

e dr

aw to

ol to

dra

w a

rec

tang

leco

verin

g lin

e A

l to

K4.

Usi

ng th

e te

xt-b

ox to

ol d

raw

ano

ther

box

for

Box

D in

form

atio

n. In

this

box

, ent

er th

e nu

mbe

r of

stu

dent

s (f

rom

colu

mn

6) w

ho s

ucce

ssfu

lly c

ompl

eted

thei

r pr

ogra

ms

[D1]

, the

num

ber

of s

tude

nts

(rep

orte

d in

col

umn

1) o

rigin

ally

sch

edul

ed to

com

plet

e th

eir

prog

ram

s [D

2], a

nd y

our

scho

ol's

com

plet

ion

rate

[100

x D

1/13

2]. S

ee th

e in

stru

ctio

ns fo

r B

ox D

info

rmat

ion

on th

efo

llow

ing

page

.

On

row

5, e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

ly th

esa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

row

6 a

nd b

elow

, the

follo

win

g da

ta m

ust b

e in

clud

ed fo

r ea

chst

uden

t who

will

be

incl

uded

in y

our

scho

ol's

com

plet

ion

rate

.

Col

umn

1:E

nter

the

stud

ent's

Soc

ial S

ecur

ity n

umbe

r us

ing

hyph

ens

to s

epar

ate

the

num

bers

(ex

ampl

e:00

0-00

-000

0) o

f all

your

reg

ular

stu

dent

s w

ho m

eet t

heco

nditi

ons

iden

tifie

d on

pag

e 14

7. S

ort i

n nu

mer

ical

orde

r w

hen

read

y to

prin

t the

spr

eads

heet

.

Ent

er th

e st

uden

t's n

ame.

Ent

er 'e

ach

stud

ent's

pro

gram

of s

tudy

. Do

not u

seab

brev

iatio

ns.

Ent

er M

M/D

D/Y

YY

Y (

mon

th/d

ay/y

ear)

to id

entif

y th

eda

te th

at e

ach

stud

ent w

as o

rigin

ally

sch

edul

ed, a

t the

time

of e

nrol

lmen

t, to

com

plet

e hi

s or

her

pro

gram

of

stud

y.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

the

stud

ent's

beg

inni

ngan

d en

ding

enr

ollm

ent d

ates

.

Ent

er X

if ih

e ku

dent

mee

ts o

ne o

f the

follo

win

g th

ree

succ

essf

ul c

ompl

etio

n co

nditi

ons.

(If

not,

leav

e bl

ank.

)

(1)

The

stu

dent

rec

eive

d a

degr

ee a

t you

r sc

hool

.

OR

Col

umn

2:

Col

umn

3:

Col

umn

4:

Col

umn

5:

Col

umn

6:

(2)

The

stu

dent

tran

sfer

red

from

you

r sc

hool

to a

high

er le

vel e

duca

tiona

l pro

gram

.

OR

(3)

The

stu

dent

rem

aine

d en

rolle

d at

you

r sc

hool

at

the

end

of th

e 12

-mon

th p

erio

d an

d w

as m

akin

gsa

tisfa

ctor

y ac

adem

ic p

rogr

ess

(SA

P)

tow

ard

com

plet

ion

of h

is o

r he

r ed

ucat

iona

l pro

gram

.

1_7

J

Col

umn

7:

Col

umn

8a:

Col

umn

8b:

Col

umn

8c:

Col

umn

9:

36

App

eaN

ng E

xceN

ona0

ViM

gath

g C

Ircu

mst

ance

sB

ased

on

the

Com

pOet

km R

ate

How

to f

ili o

ut F

Y 1

996

Com

plet

ion

Rat

e sp

read

shee

t (co

nt'd

)

Ent

er th

e da

te th

e de

gree

was

rec

eive

d fo

rea

ch s

tude

nt w

ho m

et th

e su

cces

ful

com

plet

ion

cond

ition

s by

rec

eivi

ng a

deg

ree

from

you

r sc

hool

.

Ent

er th

e M

M/D

D/Y

YY

Y to

iden

tify

the

tran

sfer

date

for

each

stu

dent

who

met

the

succ

essf

ulco

mpl

etio

n co

nditi

ons

by tr

ansf

errin

g fr

om y

our

scho

ol to

a h

ighe

r le

vel e

duca

tiona

l pro

gram

.

Ent

er th

e na

me

and

addr

ess

of th

e sc

hool

for

each

stu

dent

who

tran

sfer

red

from

you

r sc

hool

to a

hig

her

leve

l edu

catio

nal p

rogr

am.

Ent

er th

e na

me

of th

e hi

gher

-leve

l edu

catio

nal

prog

ram

of e

ach

stud

ent w

ho tr

ansf

erre

d fr

omyo

ur s

choo

l to

a hi

gher

leve

l edu

catio

nal

prog

ram

.

Ent

er X

for

each

stu

dent

who

met

the

succ

essf

ul c

ompl

etio

n co

nditi

ons

by r

emai

ning

enro

lled

and

mai

ntai

ning

sat

isfa

ctor

y ac

adem

icO

rogr

ess

at y

our

scho

ol a

t the

end

of t

hese

lect

ed 1

2-m

onth

per

iod.

Inst

ruct

ions

foi B

ox D

(lo

cate

d in

the

shad

ed a

rea

0 C

ount

the

num

ber

of X

s th

at a

ppea

r in

Col

umn

6. T

he to

tal

num

ber

of X

s w

ill b

e D

1 in

the

calc

ulat

ion.

Rec

ord

this

num

ber

in B

ox D

on

the

CR

spr

eads

heet

. Thi

s is

the

num

ber

ofst

uden

ts w

ho w

ere

succ

essf

ully

com

plet

ing

thei

r pr

ogra

ms.

Cou

nt th

e nu

mbe

r of

stu

dent

s lis

ted

in th

e C

R s

prea

dshe

et b

yco

untin

g th

e nu

mbe

r of

ent

ries

in C

olum

n 1.

The

tota

l num

ber

of s

tude

nts

will

be

D2

in th

e ca

lcul

atio

n. R

ecor

d th

is n

umbe

rin

Box

D in

the

CR

spr

eads

heet

. Thi

s is

the

num

ber

ofst

uden

ts th

at w

ere

sche

dule

d to

com

plet

e du

ring

the

12 m

onth

perio

d.

pC

alcu

late

100

x 0

11D

2 an

d re

cord

the

resu

lt in

Box

D o

n th

eC

R s

prea

dshe

et. T

his

perc

enta

ge is

you

r sc

hool

'sco

mpl

etio

n ra

te.

Sch

ool N

ame

OP

E ID

Num

ber

12-M

onth

Per

iod:

Sam

ple

4/2/

1994

-4/1

/199

5

FY

199

6C

ompl

etio

n R

ate

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

(See

inst

ruct

ions

.)-o

-

=je

.-

MO

LDN

o. o

f Stu

dent

s W

ho M

et S

ucce

ssfu

l Com

plet

ion

Con

ditio

ns (

from

col

umn

6) p

i)N

o. o

f Stu

dent

s O

rigin

ally

Sch

edul

ed to

Com

plet

e P

rogr

ams

(fro

m c

olum

n 1)

[D21

Com

plet

ion

Rat

e [1

00 x

D1/

D2]

%

.

1. S

tude

nt's

SS

N

(sod

in n

umer

ical

ord

er)

2. S

tude

nt's

nam

e3.

Stu

dent

's

prog

ram

of s

tudy

4. D

ate

that

stud

ent w

as

orig

inal

lysc

hedu

led

to

com

plet

e

prog

ram

of

stud

y

MM

/DD

/YY

YY

6. S

tude

nt's

enro

llmen

t

date

s

(fro

m m

woo

mm

to M

WD

D/Y

rrn

6. If

stu

dent

met

the

succ

essf

ul

cond

ition

s,en

ter

X

7. D

ate

stud

ent

rece

ived

deg

ree

from

you

r

scho

ol, i

f

appl

icab

le

MM

/DD

/YY

YY

8a. D

ate

stud

ent

tran

sfer

red

to

high

er le

vel

prog

ram

, if

appl

icab

le

MW

DD

/YY

YY

8b. N

ame

and

addr

ess

of s

choo

l

to w

hich

stu

dent

tran

sfer

red

to

high

er le

vel

prog

ram

, if

appl

icab

le

8c. N

ame

of h

ighe

rle

vel e

duca

tiona

l

prog

ram

stu

dent

tran

sfer

red

to,

if ap

plic

able

(do

NO

T u

se

abbr

evia

tions

)

9. If

stu

dent

met

the

succ

essf

ul

com

plet

ion

cond

ition

s

by r

emai

ning

enro

lled

and

mak

ing

SA

P,

ente

r X

111-

11-1

111

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183

Pag

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Appeals

December 15, 1998


GLO: AL ACCOUNTING, INC.1212 Main StreetDunkirk, Maine 11111-2222(111) 111-1111

U.S. Department of EducationDefault Management DivisionATTN: Exceptional Mitigating Circumstances AppealsROB 3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

Sample Letter

OPE ID#: [insert OPE lD#]

Subject: Independent Accountant's Attestation Report for Exceptional MitigatingCircumstances Appeal Based on FY 1996 Economically Disadvantaged andCompletion Rates.


We have examined management's assertion included in its representation letter, dated [insert date],that the information contained in [insert school's name]'s OPE ID# [insert OPE ID#] exceptionalmitigating circumstances appeal based on its economically disadvantaged and completion rates, iscomplete, accurate and determined in accordance with the requirements of 34 CFR § 668.17(c). Asdiscussed in that representation letter, management is responsible for [insert school's name]'scompliance with those requirements. Our responsibility is to express an opinion on management'sassertion about the institution's compliance based on our examination.

Our examination was made in accordance with standards established by the American Institute ofCertified Public Accountants and, accordingly, included examining, on a test basis, evidence about[insert school's name]'s compliance with 34 CFR § 668.17(c) and performing such other procedures aswe considered necessary in the circumstances. We believe our examination provides a reasonablebasislor our opinion. Our examination does not provide a legal determination on [insert school'snamers compliance with specified requirements.

In our opinion, management's assertion that the information contained in [insert school's name]'sappeal, dated [insert date] which reports that [insert school's name] has an economically disadvantagedrate of [insert EDR XX.X °A] and a completion rate of [insert CR YY. Y°/0] for the twelve-month periodbeginning on [insert MM/DD/YYYY] and ending on [insert MM/DD/YYYY] is complete, accurate, anddetermined in accordance with the requirements set forth in 34 CFR § 668.17(c), is fairly stated, in allmaterial respects.

This report is intended solely for the information of an audit committee, management, and theU.S. Department of Education. However, this report is a matter of public record and its distribution isnot limited.

Respectfully submitted,

Nevrei Soar%Mary Smith, CPAPresident, Global Accounting, Inc.

Page 166

184


WEhdrawnn

If a school decides not to continue with an appeal, it may withdrawfrom the appeal process by notifying the Department in writing andsending a copy to the involved guaranty agencies and/or Direct Loanservicer.

An appeal is withdrawn in its entirety, not on anagency-by-agency or servicer-by-servicer basis.

Why would my school want to withdraw anappeal?At various stages of the appeal process, your school may evaluatewhether it is useful to continue with an appeal. For instance, afterreviewing a guaranty agency and/or Direct Loan servicer's responseto a list of alleged errors, a school might decide NOT to proceed withan appeal because it would not significantly change its official cohortdefault rate.

To submit an erroneous data appeal to theDepartment, your school's erroneous data appeal mustreduce one of its three most recent official cohortdefault rates to below 25.0 percent.' Your school shouldwithdraw its erroneous data appeal if the appeal byitself or in combination with other cohort default rateappeals would not reduce one of its three most recentofficial cohort default rates below 25.0 percent.

1. 34 CFR § 668.17(c)(1)(i)(B)


183Page 167

Appeals

(IN If my school

withdraws its appeal, will theDepartment return the appealmaterials the school sent?

A. Yes, the Departmentwill acknowledge yourschool's withdrawal, inwriting, and return yourschool's appeal materials.

Page 168

Withdrawing an Appeal

shouki my sc notWy the Departmentlet K s vAthdraw'ing an appeaD?

Your school may withdraw its appeal at any time until theDepartment issues a decision on the appeal. If your school would liketo withdraw its appeal, notify the Department in writing and send acopy of the letter to the applicable guaranty agencies and/or DirectLoan servicer.

If your school is withdrawing one or more of its appeals during theappeal process (usually as a result of receiving a final response froma guaranty agency or Direct Loan servicer), please follow thistimetable:

When withdrawing an erroneous data appeal, notify theDepartment within 5 working days of receiving the finalresponse to your school's list of alleged errors from ALLrelevant guaranty agencies and/orthe Direct Loan servicer.

Example: After reviewing the responses from the ABCguaranty agency and the Direct Loan servicer, Our TownCollege (OTC) determined that therewere no errors in itsFY 1996 official loan record detail report and that its 27.2percent official cohort default rate was accurate. Within 5working days of receiving the response from the DirectLoan servicer, which was the last response received by theschool, OTC wrote the Department that itwas withdrawingits FY 1996 erroneous data appeal; simultaneously it sent acopy of the withdrawal letter to the ABC guaranty agencyand Direct Loan servicer.

o When withdrawing an improper loan servicing andcollection appeal, notify the Department within 30calendar days of receiving the final response to yourschool's request for loan servicing records from ALLguaranty agencies.


Appeals Withdrawing an Appeal

Example: State Technical College (STC) reviewed theloan servicing records provided by the applicable guarantyagencies and discovered that all the loans were properlyserviced under 34 CFR § 668,17(h)(3)(viii). Within 30calendar days of receiving all of the requested loanservicing records from the final guaranty agency, STCwrote to the Department that it was withdrawing its FY 1996improper loan servicing appeal; simultaneously, it sent acopy of the withdrawal letter to the applicable guarantyagencies.

When withdrawing an exceptional mitigatingcircumstances appeal, notify the Department within 60calendar days of the date your school received notice thatit was subject to sanctions.

Example: State Community College (SCC) submitted anexceptional mitigating circumstances appeal to theDepartment within the required 30-calendar-day timeframe. SCC then submitted its appeal to an independentauditor for certification. The auditor found thatmanagement made material misstatements and that theschool did NOT meet exceptional mitigating circumstancesthresholds. Within 60 calendar days of the date SCCreceived notice that is was subject to sanctions, SCC wroteto the Department that the school was withdrawing its FY1996 exceptional mitigating circumstances appeal.

How does my school] w0thdraw an appea0?

If your school decides that it no longer wishes to appeal, it shouldnotify the Department, in writing, by sending:

* A letter on your school's letterhead stating

. your school's OPE ID number,

that your school wishes to withdraw its appeal,

the fiscal year to which the appeal applies,


Appeals

The Department will not acceptany appealtOrrespondence byfacsimile (fax)or e-mail.

The Department recommendssending all correspondence returnreceipt requested or commercialovernight delivery.

The Department accepts .dei1esfrömcommercialcouriers andlor hand deliveriesMonday through Friday, 8:00 ,a:m. to 4:30 p.m. (EasternTime).

Page 170

Withdrawing an Appeal

* the type of appeal that is being withdrawn (erroneousdata,improper loan servicing, and/or exceptional mitigatingcircumstances).

a signature by your school's President/CEO/Owner,followed by a signature block providing the signer's nameand job title. (See sample letter Withdrawing an FY[insert year(s)] [choose erroneous data, improperloanservicing, and/orexceptional mitigating circumstances]Appeal on the next page.)

AND

a notation that a copy of the letter will be sent to the involvedguaranty agencies and/or Direct Loan servicer.

If sent by commercial overnight mail/courierdelivery, send yourschool's appeal withdrawal to:

U.S. Department of EducationDefault Management DivisionATTN: Appeal WithdrawalsROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service, send your school's appealwithdrawal to:

U.S. Department of EducationDefault Management DivisionATTN: Appeal WithdrawalsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

188


Appeals Withdrawing an Appeal

Our Town A&M Uniyesity1212 Bell LaneLeonardtown, Wisconsin 12345-6789(123) 456-7890

Deaember 6, 1998

U.S. Department of EducationDefault Management DivisionATTN: RequeStforAdjustmentROB-3, Room 5125600 IndependenceAvenue, SW,Washington, DC 20202-5353

Sample Letter

'OPE ID#: [insert OPE ID#I

Subject: Withdrawing an FY [insert year] [choose erroneous data, improper loanservicing,and/orexceptionalmitigating circumstances] Appeal

ToWhom It May Concern:

Our Town A&M University, OPE ID# [insert OPE IDit] , wisheS tawithdraw its FY:,[insert.'year] appeal based on [choose erroneous data, improper loan servicind, and/orexceptional Mitigating circumstances].

Thank you for your consideration.

Sincerely,

de

John Doe, PresidentpurTownA&MUniversity

'State buarantyAgency'Direct Loan Servicer


189Page 171

cdornmEjon

guararray Agendes

Appea a

A school may write to a guaranty agency to obtain information toappeal the school's official cohort default rate. Guaranty agencies arerequired to respond to these requests.'

Because some appeal time frames begin when a school receives aresponse from a guaranty agency, the Department recommends thatguaranty agencies:

send all correspondence to schools return receipt requested orvia commercial overnight mail/courier delivery

AND

maintain files of signed returned receipts.

There are two official cohort default rate processes thatdo not involve guaranty agencies. Guaranty agenciesdo NOT have roles in requests for adjustments andexceptional mitigating circumstances appeals. Page178 of this section provides guidance to guarantyagencies if a school mistakenly sends a request foradjustment or an exceptional mitigating circumstancesappeal to a guaranty agency.

1. 34 CFR § 682.401(b)(15)


190

The Direct Loan Servicer hasbeen provided separate guidancefor the cohort default nue appealprocess.

Please write the Department'sDefault Management Division atthe address listed in Appendix C,page 1 when your guarantyagency's name, address, phonenumber, contact person, ore-mail address changes.

The Department will frequentlycall to request copies of materialwhich verifies a school's receiptof the guaranty agency response.

Page 173

Appeals

The monthly status report is acumulative list of cohort defaultrate requests from schools thatincludes ALL requests receivedafter the release of the FY 1996official-cohort rates UNTIL therelease of the FY 1997 officialcohort rates.

information for Guaranty Agencies on Appeals

GVAJOIM'HLY 37A'US .REPO'R'S

How does a guaranty agency notnfy theDepartment about the status of a sc loon'srequests?A guaranty agency should send the Department a copy of its responseto a school's requests. The information that needs to be provided to aschool is detailed in the specific appeals sections that follow.

In addition to receiving copies of correspondence with schools, theDepartment requests that each guaranty agency provide theDepartment with a monthly status report. These status reports willassist the Department in monitoring that the time frames within theappeals process are met. The status report should be sent to theDepartment within 5 working days of the endof the month. For example, the status reportfor November 1998 should besent byDecember 5, 1998.

The monthly report provides the Departmentwith a status update on cohort-default-rate-related requests that guaranty agenciesreceive from schools after the release of theFY 1996 official cohort default rates. Thereport should be a cumulative listing of all

Q. Can a guaranty agencysubmit copies of its responsesto schools' requests as part ofits monthly statais report to theDepartment?

ik. Yes, a guaranty agencymay batch its copies and sendthem to the Department once amonth along with its monthlyreport.

cohort-default-rate related requests and should reflect the date that theguaranty agency responded to the school's request and the date theschool received the response.

The monthly report should be in order by:

1. OPE ID#2. Appeal type3. Fiscal year

(Guaranty agencies should use spreadsheet Monthly Status Reporton Cohort Default Rate Requests, on page 177, or its equivalent,to submit reports.)


191

Appeals

If sent by commercial overnight mail/courier delivery, sendcopies and monthly status reports to:

U.S. Department of EducationDefault Management DivisionATTN: Guaranty Agency Monthly Status

ReportsROB-3, Room 39057th and D Streets, SWWashington, DC 20202

Information for Guaranty Agencies on Appeals

If sent by U.S. Postal Service, send copies and monthly statusreports to:

U.S. Department of EducationDefault Management DivisionATTN: GuarantyAgency Monthly Status

ReportsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

FY 1996 Official Cohort Default Rate Guide192

The Department recommends, -sending all correspondence"return receiptsequested or viacommercial overnight mail/cOunerdelivery

The Department acceptsdeliveries from commercial°couriers and/or hand deliverieil-Monday through Friday, 8.00

_ a.m. to 4.30 p.m "(EasternTittle)

Page 175

Cor

rinA

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ort D

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ate

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List

all

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that

req

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ohor

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ault

rate

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rmat

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spre

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are

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in th

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the

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left

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atio

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the

right

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a so

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the

spec

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num

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the

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pag

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pag

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rep

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ppea

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follo

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req

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ing

coho

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efau

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form

atio

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this

repo

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riod.

Col

umn

1:

Col

umn

2:

Col

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3:

Col

umn

4:

Col

umn

5:

Col

umn

6:

Col

umn

7:

Ent

er th

e sc

hool

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ix-d

igit

OP

E ID

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Ent

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hool

's n

ame.

Ent

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pe o

f req

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. Use

ER

(er

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data

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LS

(im

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an s

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) to

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type

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Ent

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s). U

se F

Y 1

994,

FY

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and

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FY

199

6 to

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appl

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M/D

D/Y

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the

date

the

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a re

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the

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Ent

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M/D

D/Y

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Y to

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the

date

the

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spon

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om th

egu

aran

ty a

genc

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Ent

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in th

is c

olum

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nee

ded.

191

Gua

rant

y A

genc

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onth

ly S

tatu

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Coh

ort D

efau

lt R

ate

Req

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upN

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a s

ampl

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shee

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1. S

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ype

ofre

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(ER

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bein

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(FY

199

4, F

Y 1

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or F

Y 1

996)

6. D

ate

the

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a re

spon

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the

scho

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(MM

/DD

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or

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ank)

6. D

ate

the

scho

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for

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from

the

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(MM

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.._.

00 1

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_

MM

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[sen

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U.S

. Dep

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196

APPeals

Page 178


information about a guaranty agency's rale inspecific situations follows.

REQUES' FOR. AD,, fr\u I 4.1

A guaranty agency should NOT review a school's request foradjustment, since schools should submitall requests for adjustmentdirectly to the Department.

If a guaranty agency receives a request for adjustment from a school, itimmediately should contact the school to inform it that the request foradjustment must be sent to the Department, and that the request mustbe sent within 10 working days of the school receiving its official loanrecord detail report.

ENCER-110MA. MniennmeC[IRCUMSTARICn APPEA=A guaranty agency does NOT have a role in a school's appeal basedon exceptional mitigating circumstances. An exceptional mitigatingcircumstances appeal is determined by the Department on the basisof school information and Department records.

If a guaranty agency receives an exceptional mitigating circumstancesappeal from a school, it immediately should contact the school andinform it that the exceptional mitigating circumstances appeal must besent to the Department, and that the appeal must be sent within 30calendar days of the school receiving its official cohort default rate.


AppealsInformation for Guaranty Agencies on Appeals

Kow iong does a guaranty agency have torespond to a schoors request for vernfncation oferroneous data?The guaranty agency must respond to a school within 15 workingdays of receiving the school's request toverify erroneous data.2

What if nforeseen circumstances prevent aguaranty agency from respondnng to a schoon'srequest withnn the requnred 16-working-daypernod?If a guaranty agency is unable to respond within the required 15

working days, it should:

o send the school a letter

explaining the circumstances causing the delay,

+ telling the school when it will respond,

explaining that ihe school's opportunity to submit an appealto the Department is not being jeopardized as the timeframe for submitting appeals does not begin until theschool receives the guaranty agency's response,3

AND

+ including a notation that a copy will be sent to the

Department.

AND

<> simultaneously, send a copy of the letterto the Department.

2. 34 CFR § 682.401(b)(15)3. 34 CFR § 668.17(c)(8)

FY 1996 Official Cohost Default Rate Guide 198

If a school does NOT receivea response from a guarantyagency within the requiredtime period, the school maynotify the Department, inwriting, that it has notreceived the required

response.

Page 179

APPeals

Page 180


How s louk a guaranty agency respond to anhieblle.sthooll9s request for verificaUon oferroneous data?Occasionally, a school requests verificationof erroneous data when itis not eligible to do so. The following table summarizes howaguaranty agency should respond to requests from ineligible schools:

Guaranty Agency Response toErroneous Data Requests From

lneligible Schools

a school that is NOT subject to the guaranty agency does NOT reviewsanctions submits a request for any part of the school's request. Theverification of erroneous data guaranty agency should respond to the

school and explain that only schoolsthat are subject to sanctions mayappeal on the basis of erroneous data.4Refer the school to the erroneous dataappeal section beginning on page 43 ofthis guide, and simultaneously send acopy of the letter to the Department.

a school that is subject to extended the guaranty agency reviews theloss of Federal Family Education allegations and provides a responseLoan (FFEL) Program and/or Direct ONLY for the FY 1996 data allegations.Loan Program eligibility AND/OR In its response to the school, thelimitation, suspension, or termination guaranty agency should explain that it(LS&T) of federal student financial can review only the FY 1996 dataassistance programs requests allegations, because the school is notverification of erroneous data for its eligible to appeal any other cohortFY 1996, FY 1995 and/or FY 1994 default rates. Refer the school to theofficial cohort default rates erroneous data appeal section

beginning on page 43 of this guide, andsimultaneously send a copy of theletter to the Department.

4. 34 CFR § 668.17(c)(1)(i)



Guaranty gency F''esponse toErroneous Data Requests From

ineligible Schools (cont'd)

a school's request for verification oferroneous data is sent more than10 working days after the schoolreceived its official cohort defaultrate notification letter from theDepartment

the guaranty agency does NOT reviewany part of the school's request. In itsresponse to the school, the guarantyagency should explain that it is unableto review the request because theschool missed the regulatory deadline.5Refer the school to the erroneous dataappeal section beginning on page 43 ofthis guide, and simultaneously send acopy of the letter to the Department.

0 The guaranty agency shouldcontact the Department if it needsassistance verifying the date anofficial cohort default rate wasreceived by a school.

a school alleges errors that it didNOT challenge during the draftdata review process, and thealleged errors are NOT new dataincluded in the official loan recorddetail report

the guaranty agency should NOTreview the alleged errors. (Theguaranty agency should, however,review all eligible allegations.) In itsresponse to the school, the guarantyagency should explain that it is unableto review the allegations because theschool was required to have challengedthe data during the draft data reviewprocess BUT failed to do so AND thedata are not new data!' Refer theschool to the erroneous data appealsection beginning on page 43 of thisguide, and simultaneously send a copyof the letter to the Department.

5. 34 CFR § 668.17(c)(8)(i) and 668.17(i)6. 34 CFR § 668.17(j)(7)


Q. How does a guarantyagency-know when a sehool'received its official cohortdefaiilt rate?

A. The Department mailsall Official cohort default ratesat an announced time, 'andtracks the school's receipt ofthese rates. Before denying aschool's request on the basis ofa late4ubmission, a guarantyagency should contact theDepartment to verify the actualdate the school received itsrate

Page 181

APPeals

Please see page 9 for moreinformation on repaymentdates.


Responding to Specific Types of Allegations ofError

What shouid a guaranty agency do when a schoo0makes an aillegation of error that deais with Oinking aFederai SLS Loan and a Federai Stafford Loan?For any Federal SLS Loan that was NOT reported in a cohort periodprior to FY 1993, the following applies:

* If a student has both a Federal SLS Loan and a FederalStafford Loan that were both obtained in the same period ofcontinuous enrollment, the date the student entered repaymentfor the Federal SLS Loans is the same as the date the studententered repayment for the Federal Stafford Loan.

* In all other instances, the date the studententered repaymentfor the Federal SLS Loan is the day following the day thestudent is no longer enrolled on a half-time basis.

Underthe above guidelines, which were implemented beginning withFY 1993 cohort default rates, a loan that was reported as havingentered repayment prior to FY 1993 might also meet the criteria to beincluded in FY 1993 or later. To prevent the possibility of double-counting loans, any Federal SLS loan that was reported in a cohortperiod prior to FY 1993 will remain in that cohort period and not bereported again.

Kow does a guaranty agency determkte Df a lloanas converted ustIg a date-specffic or amonth-spedfic methodollogy?A guaranty agency reviews its records to determine how the loanoriginally was converted into repayment by the lender. A school hasno role in the lender's decision and may not appeal to guarantyagencies, or to the Department to change a lender's methodology.

The repaYment date for FFEL Program/Stafford Loansmay be date-specific (for example, 5/16/1996) ormonth-specific (for example, 5/1996) if the loan wasconverted into repayment before March 1996.Beginning in March 1996, the date entered repaymentmust be date-specific.


204

AppealsInfmmation for Guaranty Agencies on Appeals

Flow shoulld a guaranty agency respond to aschoors anegatrion tlat a oan was repurc lasedby the [lender?

The guaranty agency should indicate why the loan was repurchased.

* If the loan is repurchased by the lender because theguaranty agency determined that the lenderfailed to meetthe insurance requirements, the loan becomes anuninsured loan. Uninsured loans are not included in eitherthe numeratororthe denominator of the cohortdefault rate

calculation.

o If the loan is repurchased because the lender incorrectlysubmitted the loan to the guaranty agency and the lenderimmediately requested the loan be returned, the loan is not

a defaulted loan unless the lendersubsequently submitsanother claim on the loan and that claim is paid within the

cohort period in question.

If the loan is repurchased because the borrowerestablished a new payment plan and is making payments,the loan is still considered a defaulted loan, for cohortdefaulted purposes, UNLESS the loan meets therehabilitation criteria discussed in the specialcircumstances chart on page 14.

FY 1996 Official Cohort Default Rate Guide 202Page 183

Appeals

Q. What if a guarantyagency can respond to onlya portion of a school'sallegations within 15working days?

AL. It should hold thatportion of the responseuntil ,it can pruvide,aresponse to ALL theschool's allegations. Theguaranty agency alsoshould notify the schooland the Department thatthe reply will be delayedand remind the school thatthe delay does-notjeopardize the school'sappeal rights. When ALLthe needed data aregathered, the guarantyagency should send ALL ofthe data to the school in asinglemailing..

Page 184


What format shouDd a guaranty agency use torespond to a schoes request for verificaon oferroneous data?

When responding toa school's request for verification of erroneousdata, the guaranty agency response must have the followingcomponents.

Component 1 consists of:

0 A letter on the guaranty agency's official letterhead withthe school's name,

ompOnent,

the school's OPE ID number,

the type of appeal to which the guaranty agency is responding,the fiscal year(s) for which the guaranty agency is responding,

AND

+ an indication that a copy was sent to the Department.

(See sample letter FY [insert year(s)] Erroneous Data Responseto Allegations, on page 185.)


0 a completed spreadsheet responding to the school'srequest for information. (Use FY [insert year(s)] Responseto a School's Allegations of Erroneous Data, on page187, or its equivalent.)

+ guaranty agencies must provide every data elementlisted on the spreadsheet.

Component 2

Component 3 contains:

0 an OPTIONAL narrative or comment sectionabout entries on the spreadsheet.

component 3.(Optional)

203


Appeals

November 25, 1998

Information tor Guaranty Agencies on Appeals

State Guaranty Agency1010 Maple Lane, Suite 200Woodston, Michigan 98765-4321(111)111-1111

Our Town A&M UniversityATTN: John Doe, President1212 Bell:LaneLeonardtown, Wisconsin 12345-6789

Sample Letter

OPE ID#: [insert OPE ID-tt]

Subject: FY [insert year(s)] Erroneous Data Response to Allegations


This is State Guaranty Agency's response to [insert school's name]'s, OPE ID # [insert

OPE ID11 allegations of erroneous data in its FY [insert year(s)] official cohort default rate.

The information you requested is on the enclosed spreadsheet.

Sincerely,

Send editastSarah Belham, CEOState GuarantyAgency

Enclosures



204Page 185

'n

Col

umn

2:

Col

umn

3:

Nes

pond

ng tp

, a S

chol

ars

AllD

sgaU

ons

Err

vons

ous

Bea

How

o f

iii o

ut I

FY [

inse

rt y

ear(

s)]

Res

pons

e to

a Sc

hooi

's A

llega

tions

ofErroneous

Dat

aspreadsheet

List

all

resp

onse

s to

a s

choo

l's r

eque

st fo

r ve

rific

atio

n of

err

ors

in it

sof

ficia

l loa

n re

cord

det

ail r

epor

t usi

ng a

spr

eads

heet

sof

twar

eap

plic

atio

n su

ch a

s Lo

tus

1-2-

3, S

uper

calc

, or

Exc

el. T

he r

esul

ting

spre

adsh

eet i

s se

nt to

the

scho

ol th

at r

eque

sted

the

data

.

The

spr

eads

heet

wid

th s

houl

d be

on

one

8 1/

2 x

11 p

age

in a

land

scap

e (h

oriz

onta

l) la

yout

. A s

ampl

e sp

read

shee

t fol

low

s th

ese

inst

ruct

ions

.H

eade

r:

Foo

ter:

Ent

er F

Y [i

nser

t yea

r(s)

] Res

pons

e to

a S

choo

l'sA

llega

tions

of E

rron

eous

Dat

a in

the

cent

er o

f the

head

er a

rea.

In th

e up

per

left

area

, ent

er th

ere

ques

ting

scho

ol's

nam

e an

d its

OP

E ID

num

ber.

In th

e up

per

right

are

a, e

nter

the

guar

anty

age

ncy'

sna

me.

Ent

er th

e da

te in

the

low

er le

ft si

de o

f the

foot

erar

ea. S

et u

p au

tom

atic

pag

inat

ion

in th

e rig

ht s

ide

of th

e fo

oter

are

a so

that

the

spec

ific

page

num

ber

and

the

tota

l num

ber

of p

ages

sho

w o

n ea

ch p

age,

for

exam

ple

(pag

e 1

of 1

0 pa

ges)

.

On

Row

1 e

nter

exa

ctly

the

sam

e co

lum

n na

mes

in e

xact

ly th

esa

me

orde

r as

list

ed o

n th

e sa

mpl

e sp

read

shee

t.

On

Row

2 a

nd b

elow

, inc

lude

the

follo

win

g da

ta fo

r ea

ch lo

an w

here

ther

e is

an

alle

ged

erro

r.C

olum

n 1:

Ent

er th

e bo

rrow

er's

Soc

ial S

ecur

ity n

umbe

r (S

SN

)us

ing

hyph

ens

to s

epar

ate

the

num

bers

(ex

ampl

e:00

0-88

-000

0). I

f mor

e th

an o

ne S

SN

is li

sted

, sor

tby

num

eric

al o

rder

whe

n re

ady

to p

rint t

hesp

read

shee

t

Ent

er th

e bo

rrow

er's

nam

e.

Ent

er D

ispu

ted

(Dis

pute

d D

ata)

or

New

(In

corr

ect

New

Dat

a) to

iden

tify

if er

rors

are

alle

ged

on th

eba

sis

of u

nres

olve

d da

ta fr

om th

e dr

aft d

ata

revi

ewpr

oces

s or

inco

rrec

t new

dat

a.

O

Col

umn

4:

Col

umn

5:

Col

umn

6:

Col

umn

7:

Col

umn

8:

Col

umn

9:

Col

umn

10:

Col

umn

11:

Col

umn

12:

Col

umn

13:

ColumniC

Ent

er th

e lo

an ty

pe. U

se F

FE

US

F (

Fed

eral

Fam

ilyE

duca

tion

Loan

/Sta

fford

), D

US

F (

Dire

ct L

oan/

Sta

fford

), o

r S

LS (

Sup

plem

enta

l Loa

ns fo

r S

tude

nts)

to id

entif

y ty

pe o

f loa

n.

Use

X to

iden

tify

whe

ther

an

SLS

rep

aym

ent d

ate

need

s to

be

linke

d to

a F

FE

L/S

taffo

rd r

epay

men

tda

te. I

f lin

kage

is n

ot a

pplic

able

, lea

ve b

lank

.

Ent

er M

M/D

D/Y

YY

Y (

mon

th/d

ay/ y

ear)

to id

entif

yth

e B

CD

(be

ginn

ing

clas

s da

te)

of th

e lo

an p

erio

d.

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

the

EC

D (

endi

ngcl

ass

date

) of

the

loan

per

iod.

Ent

er M

M/D

DN

YY

Y to

iden

tify

LGD

(lo

an g

uara

nty

date

).

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

the

EA

RLI

ER

of

LTH

(le

ss-t

han-

half-

time)

enr

ollm

ent o

r LD

A (

the

last

date

of a

ttend

ance

).

Ent

er M

M/D

D/Y

YY

Y to

iden

tify

the

date

the

loan

ente

red

repa

ymen

t.

Ent

er M

M/D

DIY

YY

Y to

iden

tify

the

CP

D (

clai

m p

aid

date

), D

D (

the

defa

ult d

ate)

, or

the

ICR

D (

inco

me

cont

inge

nt r

epay

men

t dat

e). L

eave

bla

nk if

the

stud

ent d

id n

ot d

efau

lt.

Ent

er th

e re

com

men

ded

fisca

l yea

rs to

whi

ch a

chan

ge s

houl

d be

mad

e.

Ent

er N

(N

umer

ator

), D

(D

enom

inat

or),

or

B (

both

Num

erat

or a

nd D

enom

inat

or)

with

a n

egat

ive

orpo

sitiv

e si

gn (

-D o

r +

D)

to in

dica

te th

e ef

fect

on

the

CD

R (

coho

rt d

efau

lt ra

te)

calc

ulat

ion.

If th

ere

is n

oef

fect

, ent

er N

one.

-s- z 0).

(,) z -a

Ent

er Y

es if

ther

e is

a c

omm

ent i

n th

e bi

nder

2 0

Gi

sect

ion

of y

our

mai

ling,

oth

erw

ise

leav

e bl

ank.

Sch

ool's

Nam

eS

choo

l's O

PE

ID #

FY

[ins

ert y

ear(

s)]

Res

pons

e to

a S

choo

l'sA

llega

tions

of E

rron

eous

Dat

a

(Ins

ert G

uara

nty

agen

cy's

nam

e]

1. B

orro

wer

'sS

SN

(sod

in

num

eric

al o

rder

)

aiiii

-ii--

Oiii

i"

2. B

orro

wer

'sna

me

'3. B

asis

of

alle

gatio

n of

erro

r

(Dis

pute

d

or n

ew)

4. T

ype

of lo

an

(FF

EL/

SF

DL/

SF

or S

LS)

6. L

ink

SLS

to F

FE

L

(X o

r le

ave

blan

k)

6. B

CD

of t

helo

an p

erio

d

(MM

/DD

/YY

YY

)

7. E

CD

of t

helo

an p

erio

d

(MM

IDO

NY

YY

)

.

8. L

oan

guar

anty

dat

e

(LG

D)

(MM

/DD

/YY

YY

)

9. E

arlie

r of

LYN

or L

DA

(MM

/DD

/YY

YY

)

10. D

ate

ente

red

repa

ymen

t

(MM

/DD

NY

YY

)

11. I

dent

ifyC

PD

, DD

or IC

RD

(MM

/DD

/YY

YY

or

leav

e bl

ank)

12. F

isca

l

year

(s)

appl

icab

le

13. E

ffect

on

CD

R

calc

ulat

ion

14. C

omm

ent

in b

inde

r

sect

ion

of

your

mai

ling

(Yes

or

leav

e bl

ank)

John

DO

BD

ispu

ted

FF

EL/

SF

9/11

1995

12/1

2/19

95L9

,l1/1

995

9/21

1995

313/

1996

FY

199

6_

to

.: .

--

Not

e: T

his

is a

sam

ple

spre

adsh

eet.

See

inst

ruct

ions

.

co13

Cc z

MM

/DD

/YY

YY

2 07

[sen

d to

sch

ool]

203

Pag

eof

page

s

Appeals

Time frames when guarantyagencies charge a fee.

A school must submit fullpayment-within 15,. workingdays of receiving a guarantyagency's request forpayment.


PROPER _JDAN 3-Ewmme. ANDEC7IlON ,APPEA_

How liong does a guaranty agency have torespond to a schoes request for IloanserAcIng records?If the guaranty agency charges for loan servicing records, theguaranty agency must determine which loan servicing records arewithin the sample that will be provided to the school and bill the schoolwithin 15 working days of receiving the school's request for arepresentative sample of loan servicing records. A guaranty agencymay charge up to $10 for each loan record.' Once fullpayment isreceived, the guaranty agency has 15 working days to provide theservicing records.

If a school fails to submit full payment within the requiredtime frame and the guaranty agency has not yetprovided loan servicing records, the school loses itsrig ht to challenge that guaranty agenCy'sloan servicingrecords.8 The guaranty agency then must notify both theschool and the Department that the school has lost theright to appeal student loans guaranteed by that agencyon the basis of improper loan servicing and collection.

If a school does not submit full payment within therequired time frame BUT the guaranty agency hasprovided loan servicing records to the school, theschool's rightto challenge that guaranty agency's loanservicing records is not jeopardized.

7. 34 CFR § 668.17(h)(3)(iii)(D)8. 34 CFR § 668.17(h)(3)(iii)(F)


203


If the guaranty agency does NOT charge for loan servicingrecords, it has:

15 working days to provide loan servicing records to schoolsthat are subject to the loss of FFEL Program and/or DirectLoan Program eligibility°

AND

.0. 30 calendar days to provide loan servicing records to schoolsthat are NOT subject to the loss of FFEL Prograni and/orDirect Loan Program eligibility.'°

What if unforeseen circumstances prevent aguaranty agency from responding to a school]within the required time period?

If a guaranty agency is unable to respond within the required timeperiod, it should:

0 send the school a letter

explaining the circumstances causing the delay,

telling the school how soon it will respond,

explaining that the school's opportunity to submit an appealto the Department is not being jeopardized as the timeframe for submitting appeals does not begin until theschool receives the guaranty agency response,"

AND

4> including a notation that a copy will be sent to theDepartment.

AND

o simultaneously provide a copy of the letter to the Department.

Time frames when guarantyagencies do NOT charge afee.

If a school does NOT receivea response from a guarantyagency within the requiredtime period, the school maynotify the Department, inwriting, that it has notreceived the requiredresponse.

9. 34 CFR § 668.17(h)(3)(iii)10. Id.11. 34 CFR § 668.17(h)(3)(iv)


210

Appeals

A guaranty agency maychoose to provide all recordsin the total population ofdefaulted student borrowersor provide a representativesample based on guidanceprovided by the DePartment.

To further assist schools inreading Mi.! collection history,it may, be beneficial for yourguarantytigency toidentithe collection activities notedin 34 C.F.R. Section668.17(hX3Xviii). This maybe done by highlighting theelements in the actualcollection record provided tothe school.


Kow shoufid a guaranty agency sellect a randomrepresentatfive sampile of Doan servicfingrecords?

A guaranty agency must identify all ofa school's defaulted student loanborrowers included in the relevant cohort period that were guaranteedby the agency. From that total population, the guaranty agency mustselect a representative sample of "a size such that the universeestimate derived from the sample is acceptable at a 95 percentconfidence level with a plus or minus 5 percent confidence interval."12The Department has provided guidance to guaranty agencies on theappropriate method of selection and the appropriate sample sizes.Please contact the Department at the address or phone number listedin Appendix C, page 1 if your guaranty agency does not have thisguidance.

The representative sample is randomly selected by theguaranty agency from the relevant loan record detailreport; a school may not request specific borrowerrecords.

How shoufild a guaranty agency respond to aschoors request for fioan servficfing records thatfis not efifigfibfie to recefive the records?

Occasionally, a school requests loan servicing records when it is noteligible to do so. The table on the next page summarizes how aguaranty agency should respond to requests from ineligible schools.

12. 34 CFR § 668.17(h)(3)(iii)(B)


211

Appeals Information for Guaranty Agencies on Appeals

Guaranty Agency Response to LoanServicing Records Requests From

ineligible Schools

a school that has an official cohortdefault rate below 20.0 percentsubmits a request for loan servicingrecords

the guaranty agency does NOT providethe loan servicing records. In itsresponse to the school, the guarantyagency should explain that only schoolsthat have an official cohort default rateequal to or greater than 20.0 percentmay appeal on the basis of improper loanservicing.13 Refer the school to the loanservicing appeal section beginning onpage 71 of this guide, andsimultaneously send a copy of the letterto the Department.

a school with a cohort default rateover 20.0 percent that is NOT subjectto initial loss of Federal FamilyEducation Loan (FFEL) Program and/or Direct Loan Program eligibilityrequests loan servicing records for itsFY 1996, FY 1995 and/or FY 1994official cohort default rates

the guaranty agency provides therepresentative sample of loan servicingrecords ONLY for the FY 1996 cohort yearand only if the school's FY 1996 officialcohort default rate is 20.0 percent orgreater. In its response to the school, theguaranty agency should explain that it canprovide only the FY 1996 loan servicingrecords, because the school is not eligibleto appeal any other cohort default rates.Refer the school to the loan servicingappeal section beginning on page 71 ofthis guide, and simultaneously send acopy of the letter to the Department.

a school fails to provide a copy of theloan record detail report with itsrequest for loan servicing records

the guaranty agency should immediatelywrite to the school requesting that the loanrecord detail report be provided within 5working days. If the school does notprovide the relevant loan record detail reportwithin 5 working days of receiving therequest, the guaranty agency should writeto the school explaining that it cannotrespond to the school's request. Refer theschool to the loan servicing appeal sectionbeginning on page 71 of this guide, andsimultaneously send a copy of the letter tothe Department.

13. 34 CFR § 668.17(h)(1)


212

Appeals

Q. How does a guarantyagency know when a schoolreceived its official cohortdefault rate?

251,.. The Department mailsall official cohort default ratesat an announced time andtracks the school's receipt ofthese rates. Before denying aschool's request on the basis ofa late submission, a guarantyagency should contact theDepartment to verify the actualdate the school received its

4 rate.

A guaranty agency may chooseto provide all records in the totalpopulation of defaulted studentborrowers or provide arepresentative sample based onthe guidance provided by theDepartment.

page .192


Guaranty 1gency Response to LoanServicing Records Requests From

Oneligible Schools (cont'd)

a school's request for loan servicingrecords is sent more than10 working days after the schoolreceived its official cohort default ratenotification letter from the Department

the guaranty agency does NOT providethe loan servicing records. In itsresponse to the school, it should explainthat it is unable to review the requestbecause the school missed theregulatory deadline." Refer the school tothe loan servicing appeal sectionbeginning on page 71 of this guide, andsimultaneously send a copy of the letterto the Department.

0 The guaranty agency should contactthe Department if it needs assistanceverifying the date an official cohortdefault rate was received by theschool.

a school requests specific loanservicing records

,

.

.

the guaranty agency must provide arandomly selected sample of loanservicing records that might or might notinclude the records specified by theschool.15

0 If a guaranty agency charges forrecords, when it sends the bill itshould explain that it is required toprovide a randomly selectedsample.

p If a guaranty agency does NOTcharge for the records, it shouldsend the randomly selected recordsto the school and should explainthat it is required to provide arandomly selected sample.

Refer the school to the loan servicingappeal section beginning on page 71 ofthis guide, and simultaneously send acopy of the letter to the Department.

14 34 CFR § 668.17(h)(3)(ii)15. 34 CFR § 668.17(h)(3)(iii)(B)

213



Guaranty Agency Response to LoanServicing Records Requests From

Inefigible Schools (cont'd)

a school requests a representativesample of loan servicing recordsBUT the guaranty agencydetermines that there are not anydefaulted loans in the cohort periodthat were guaranteed by the agency'

the guaranty agency should send aletter to the school and simultaneouslysend a copy of the letter to theDepartment informing the school thatthere were no defaulted loansguaranteed by the agency for that cohortperiod.


214


What if a sc looD dentHies mfing records orsays t recMved llfleOblle records h.1 KsrepresentaUve sampOe?

A school should notify a guaranty agency, in writing, within 5 workingdays of receiving its representative sample if there are missing orillegible records. The guaranty agency then has 5 working days fromreceiving the school's written notification to provide missing records orlegible copies.

A loan servicing record is not considered missing orMoteillegible if all the relevant elements noted in 34 C. F. R.Section 668.17(h)(3)(viii) can be identified in the recordprovided. Also, a loan record is not considered missingor illegible if collection history documents are present andlegible. Therefore, a school may only requestadditionaldocumentation from the guaranty agency if the loanservicing record in question does not have the necessarymaterial to determine if the elements specified in34 C. F. R. Section 668.17(h)(3)(viii) were present.


215

Appeals Infonnation for Guaranty Agencies on Appeals

What format shouki a guaranty agency use torespond to a echoes request for kaanservMng records?

When responding to a school's request for loan servicing records, theguaranty agency response must have the following components:

Component 1 consists of:IComponent 1

A letter on the guaranty agency's official letterhead with

the school's name,

the school's OPE ID number,

the type of appeal to which the guaranty agency is responding,

the fiscal year(s) for which the guaranty agency is responding,

the total population of defaulted loans included in the applicablecohort period and guaranteed by the guaranty agency,

the number of loans included in the representative sample,AND

an indication that a copy of the letter was sent to theDepartment.

(See sample letter FY [insert year(s)] Response to Request forLoan Servicing Records on page 196.)


* a list of the names and Social Security numbers of ALL studentsincluded in the sample and the total number of defaultedstudent loans for each student provided in the sample.

.COmponent 2


* copies of ALL loan servicing records relating to loans included inthe sample.

IComponent

Q. What if a guarantyagency can provide only aportion of the loan recordswithin the required timeframes?

AL. It should hold thatportion of the loan servicingrecords until it can provide afull response. The guarantyagency should notify the schoolthat the reply will be delayedand remind the school that thedelay does not jeopardize theschool's appeal timing. WhenALL the needed loan servicingrecords are compiled, theguaranty agency should sendALL the data to the school in asingle mailing.


,21(3


November 10, 1998

State Guaranty Agency1010 Maple Avenue, Suite 200Woodston, Michigan 98765-4321(111)111-1111

Our Town A&M UniversityATTN: John Doe, President1212 Bell LaneLeonardtown, Wisconsin 12345-6789

Sample Letter

OPE 1D#: [insert OPE ID11

Subject: FY [insert year(s)] Response to Request for Loan Servicing Records


This is State Guaranty Agency's response to [insert school's name]'s, OPE ID# [insertOPE On request for loan servicing records for FY [insert year(s)].

The total population of your schoors defaulted loans guaranteed by thisagency for FY [insertyear(s)) is [insert population]. A total of [insert samplesize]loans:areincludedintherepresentativesample.

Sincerely,

Sa444 Vet/tamSarah Belham, CEOState GuarantyAgency

Enclosures



217

Appeals Infoimation for Guaranty Agencies on Appeals

If a school decides not to continue with an appeal of its official cohortdefault rate, it may withdraw from the appeal process at any time. Aschool that withdraws from the appeal process notifies theDepartment, in writing, and sends a copy to the involved guarantyagencies.


218

Sue?anty AgencyConTacU

ConascrAs

Append& Al

Guaranty Agency Contact List (Numerical) 3

Appendix A2

Guaranty Agency Contact List (Alphabetical) 1 5


213Page 1

c]T

SuE. rff.cray Agency CoMaca.lagumerke)41

CONTACTDNG REPORTDNG GUARANTY AGENCES

The guaranty agency list that follows contains the names, addresses, telephone numbers,and contacts for guaranty agencies. Each guaranty agency is listed in numerical orderby its three-digit guaranty agency code followed by the name of the state or territory inwhich it is the primary guarantor.

The number is the three-digit code found on a school's loan record detail report for eachloan record. If the number for the guaranty agency is not known, see page 15 of thisAppendix for an alphabetical listing of guaranty agencies by state or territory in which it isthe primary guarantor.

555U.S. Department ofEducation

U.S. Department of EducationATTN: Cohort Default Rate ProcessingMail Stop 41456201 Interstate 30Greenville, TX 75402-7419

(903) 408-4500

This is the address forFFEL loans only. For theDirect Loans address, seeAppendix B.


611District of Columbia

American Student AssistanceCorporation

ATTN: Cohort Section330 Stuart StreetP.O. Box 9215Boston, MA 02205

Ms. Sue Pottenger(800) 999-9080 ext. 3209pottenger©amsa.com

620Kansas

USA Group Guarantee ServicesATTN: Ms. Kristi Mueller11100 USA ParkwayFishers, IN 46038

Ms. Kristi Mueller(317) [email protected]

"4, 4" 0

Page 3

Appendix Al

654West Virginia

Pennsylvania Higher EducationAssistance Agency

ATTN: Program Review1200 North 7th StreetHQ4Harrisburg, PA 17102-1398

Ms. Lisa Hoffman(717) [email protected]

656Wyoming



701Alabama

Kentucky Higher Education AssistanceAuthority

ATTN: Manager, Policy and ClientServices Branch

1050 U.S. 127 SouthFrankfort, KY 40601-4323

Mr. Richard Nickel(502) [email protected]

Guaranty Agency Contact List (Numerical)

702Alaska



705Arkansas

Student Loan Guaranty Foundation ofArkansas

ATTN: Compliance Division Manager219 South Victory StreetLittle Rock, AR 72201-1884

Ms. Brenda Steele(501) [email protected]

706California

EDFUNDATTN: Loan Detail Information OfficeCohort Default Rate Appeals and

Disputes3300 Zinfandel DriveP.O. Box 419045Rancho Cordova, CA 95741-9045

Ms. Kevis Foley-Bumgardener(916) [email protected]


221

Appendix Al

708ColoradoColorado Student Loan ProgramATTN: Compliance, Training, and

Investigative BranchAssistant Manager of Marketing and

Appeals999 18th Street, Suite 425Denver, CO 80202-2471

Mr. Chris Lines(303) 294-5050 ext. [email protected]

709ConnectiCut

Connecticut Student Loan FoundationATTN: Manager of Guarantee

OperationsP.O. Box 1009Rocky Hill, CT 06067

Ms. Sandy Barsom(860) 257-4001 ext. [email protected]

710Delaware






712FloridaFlorida Department of EducationOffice of Student Financial AssistanceATTN: Ms. Jean Perkins325 West Gains Street255 Collins BuildingTallahassee, FL 32399-0400

Ms. Jean Perkins(850) [email protected]

713GeorgiaGeorgia Higher Education Assistance

CorporationATTN: Program Administration2082 East Exchange Place, Suite 200Tucker, GA 30084-5305

Ms. Carole Jones(770) [email protected]

716IdahoNorthwest Education Loan AssociationATTN: School Compliance Representative500 Coleman Building811 1st AvenueSeattle, WA 98104

Ms. Linda Shannon(206) [email protected]

222 Page 5

Appendix Al

717-111inois

Illinois Student Assistance CommissionATTN: Compliance Analyst1755 Lake Cook RoadDeerfield, IL 60015-5209

Ms. Terry Dallas(847) [email protected]

718Indiana



719Iowa

Iowa College Student Aid CommissionATTN: Associate Director, Claims

and Collections200 10th Street 4th FloorDes Moines, IA 50309-3609

Mr. Brian Mohr(515) [email protected]


721Kentucky

Kentucky Higher Education AssistanceAuthority

ATTN: Manager, Policy and ClientServices Branch

1050 U.S. 127 SouthFrankfort, KY 40601-4323

Mr. Richard Nickel(502) [email protected]

722Louisiana

Louisiana Office of Student FinancialAssistance

ATTN: Program ReviewP.O. Box 91202Baton Rouge, LA 70821-9202

Mr. Mark Rhodes(504) [email protected]

723Maine




2 3

Appendix Al Guaranty Agency Contact List (Numerical)

724Maryland



725Massachusetts

American Student Assistance CorporationATTN: Cohort Section330 Stuart StreetP.O. Box 9215Boston, MA 02205

Ms. Sue Pottenger(800) 999-9080 ext. [email protected]

726MichiganMichigan Higher Education Assistance

AuthorityATTN: Audit & Program Review SectionP.O. Box 30047608 W. Allegan RoadLansing, MI 48909

Mr. Dan Tryon(517) [email protected]


727Minnesota

Great Lakes Higher Education GuarantyCorporation

ATTN: Claims and ComplianceManager

P.O. Box 7859Madison, WI 53707

Ms. Lori Marty(608) [email protected]

728Mississippi



729MissouriMissouri Student Loan ProgramATTN: Associate for Compliance3515 Amazonas DriveJefferson City, MO 65109-5717

Ms. Barbara Miller(573) [email protected]

224Page 7

Appendix A1

730Montana

Montana Guaranteed Student LoanProgram

ATTN: Program SpecialistP.O. Box 203101Helena, MT 59620-3101

Ms. Mary Rehm(406) [email protected]

731Nebraska

Nebraska Student Loan ProgramATTN: Manager, Program Review and

ComplianceP.O. Box 82507Lincoln, NE 68501-2507

Mr. Kevin Taylor or Ms. Alicia Chapelle(402) 479-6718 or (402) 479-6743kevint©nslp.org or aliciac©nslp.org

732Nevada


Ms. Kristi Mueller(317) 595-1315kmueller©usagroup.com

Page 8


733New Hampshire

New Hampshire HigherEducation Assistance Foundation

ATTN: Director of Training andCompliance

P.O. Box 877Concord, NH 03302-0877

Mr. Scott Littlefield(603) 225-6612 ext. 120scottnhheaf©compuserve.com

734New Jersey

New Jersey Higher EducationAssistance Authority

Office of Student AssistanceATTN: Investigator IIP.O. Box 546Trenton, NJ 08625-0546

Ms. Lee Roach(609) 588-3238lee_roach©osa.state.nj.us

735New Mexico

New Mexico Student Loan GuaranteeCorporation

ATTN: Compliance and ProgramReview Officer

P.O. Box 922303900 Osuna, N.E.Albuquerque, NM 87199-2230

Ms. Carolyn Holder(505) 345-8821 ext. 26176733.2014©compuserve.com


Appendix AlGuaranty Agency Contact List (Numerical)

736New York

New York State Higher EducationServices Corporation

ATTN: Active Student Maintenance99 Washington AvenueAlbany, NY 12255

Mr. Raymond Francis(518) [email protected]

737North Carolina

North Carolina State EducationAssistance Authority

ATTN: MICRSP.O. Box 2688Chapel Hill, NC 27515

Mr. Jim Williams(919) 549-8614 [email protected]

738North Dakota

Student Loans of North DakotaATTN: Compliance OfficerP.O. Box 5524Bismarck, ND 58506-5524

Ms. Char Feist(701) [email protected]


739OhioNON-DEFAULTED LOANSGreat Lakes Higher Education Guaranty

CorporationATTN: Claims and Compliance

ManagerP.O. Box 7859Madison, WI 53707


DEFAULTED LOANSU.S. Department of EducationATTN: Cohort Default Rate ProcessingMail Stop 41456201 Interstate 30Greenville, TX 75402-7419

(903) 408-4500

oteThis is the address for FFEL loansonly. For the Direct Loansaddress, see Appendix B.

740Oklahoma

Oklahoma State Regents for HigherEducationGuaranteed Student Loan Program

ATTN: Darlene SmithP.O. Box 3000Oklahoma City, OK 73101-3000

Ms. Darlene Smith(405) [email protected]

226Page 9

Appendix Al

741Oregon

Oregon State Scholarship CommissionATTN: Program Review1500 Valley River Drive Suite 100Eugene, OR 97401

Ms. Carolyn Sinclair(541) [email protected]

742Pennsylvania




744Rhode Island

Rhode Island Higher EducationAssistance Authority

ATTN: Cohort Appeals560 Jefferson BoulevardWarwick, RI 02886-1320

Mr. Charles Totoro(401) [email protected]


745South Carolina

South Carolina State EducationAssistance Authority

ATTN: Mike FoxInterstate Center, Suite 210P.O. Box 210219Columbia, SC 29221

Mr. Mike Fox(803) [email protected]

746South Dakota

Education Assistance CorporationATTN: Supervisor for Pre-Claims and

Collections115 First Avenue S.W.Aberdeen, SD 57401

Ms. Ellen Welke(605) [email protected]

747Tennessee

Tennessee Student AssistanceCorporation

ATTN: School Relations Specialist404 James Robertson ParkwaySuite 1950, Parkway TowersNashville, TN 37243-0820

Ms. Stephanie Aylor(615) [email protected]

Page .10FY 1996 Official Cohort Default Rate Guide

227

Appendix Al

748Texas

Texas Guaranteed Student LoanCorporation

ATTN: Compliance AnalystP.O. Box 201725Austin, TX 78720-1725

Mr. Ken Johnson(512) [email protected]

749Utah

Utah Higher Education AssistanceAuthority

ATTN: Manager of Compliance andProgram Review

P.O. Box 45202Salt Lake City, UT 84145-0202

Mr. Jed Spencer(801) [email protected]

750Vermont

Vermont Student Assistance CorporationATTN: Manager of School Policy and

ComplianceP.O. Box 2000Winooski, VT 05404-2601

Ms. Marcia Vance(802) 654-3770 ext. [email protected]


751Virginia

Educational Credit ManagementCorporation (ECMC)

ECMC Guarantee ServicingATTN: Program Compliance Specialist411 East Franklin Street, Suite 300Richmond, VA 23219-2243

Ms. Linda Woodley(888) 775-3262 ext. [email protected]

753Washington

Northwest Educationthan ASsociationATTN: School Compliante Representative500 Coleman Building811 1st AvenueSeattle, WA 98104

Ms. Linda Shannon(206) [email protected]

755Wisconsin





FY 1996 Official Cohort Default Rate GuidePage 11

228

Appendix A1

772Puerto Rico





778Virgin Islands





800USA Group GuaranteeServices



Guaranty Agency Contact List (Numedcal)

804Arizona



815Hawaii



927Educational CreditManagement Corporation (ECMC)

[Formerly Transitional Guaranty Agency(TGA)]

ECMC Guarantee ServicingATTN: Program Compliance Specialist411 East Franklin Street, Suite 300Richmond, VA 23219-2243

Ms. Linda Woodley(888) 775-3262 ext. [email protected]


229

Appendix Al

American Samoa(no number code)



Federated States of Micronesia,Marshall Islands, .Republic of Palau

(no number code)



Guaranty Agency Contact List (Numerical)-

Guam (no number code)



Northern Mariana Islands(no number code)




230

MMETE.3My Agency Cocia.c2Vilphabodicallls

The list that follows contains, in alphabetical order, the names of states and territories

served by guaranty agencies.

The number in the second column is the three-digit guaranty agency number code found on

a school's loan record detail report for each loan record. See page 3 of this Appendix for

a list of these three-digit codes in numerical order, followed by the names of the guaranty

agencies represented by the codes, theiraddresses, telephone numbers, and points of

contact for cohort default rate appeals.-...

Stateand/or Territory

GUaran --a entynumber cdde

Alabama 701

American Samoa no number codeArizona 804Arkansas 705California. 706Colorado 708Connectidut 709.Delaware 710District of Columbia , 611Educational Credit Management Corporation 927

(ECMC)Federated States of Micronesia, Marshall Islands,

and the Republic of Palauno number code

Florida 712Georgia 713


231

Page 15

Appendix A2Guaranty Agency Contact list (Alphabetical)

.,Stite -,4

and/or Tertifory ,_

Gu'aeàntyag eticY, niaMberCode. , ,

Hawaii 815oldahb

,.

_716Illinois

, ' 71771,8',,Indiana ,: ,

Iowa 719Kansat '7,62_0

721Kentuckyouiiiana J 7223

yaine_ 723IM'aryland- ::'

Massachusetts 725,:,726-7- ----- -7-.Michigart

Minnesota

_

727Missiiii001., , 728

729730'

..,Missouri

,MontaiiaNebraska 731,Nevadb: , '732

733New Hampshire'New JerseK , 77

735New Mexico

i 7North Carolina '737North Dakota 7 , 77Northern Mariana Islands no number code

,PhiO:' -,1I 739

OklahomaOiedO-n-. ,

74074-I

Pennsylvania 742Puerto ico°-, , 772

744Rhode IslandSouth COrMn'a! 745South Dakota 746

Page 16

232

'FY 1996 Official Cohort Default Rate Guide

Appendix A2 Guaranty Agency Contact List (Alphabetical)

StateandiOr,,,etil :6

agencynum*tocie

TennesseeTexas' ,_ 748Transitional Guaranty Agency (TGA) 927

U.S. beparthientfof EdlicatiOn-USA Group Guarantee Services 800

Ptah: 749--

Vermont 750

Virgin Islands 778

Virginia 751

Washington., 753

West Virginia 654

Wiainiiii 755:Wyoming 656


233

Itirec2 Loan SerAcerCoMacra

Direct Loan Servicing Center (0101)

U.S. Department of Education Direct Loan ProgramATTN: School Relations501 Bleeker Street .

Utica, New York 13501

(888) 877-7658

When submitting a request for data, a Direct Loanschool MUST use its OPE ID number, NOT itsDirect Loan School ID number (G code).


234

U060 ID)copErtmena off

conaacRe

;Contact... ,

Have questions about cohortdefault rate appeals and generalcohort default rate issues

If sent by commercial overnightmail/courier delivery, send yourrequest to:

U.S. Department of EducationDefault Management Division (DMD)ROB-3, Room 39057th and D Streets, SWWashington, DC 20202

If sent by U.S. Postal Service,send your request to:

U.S. Department of EducationDefault Management Division (DMD)ROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353

Questions? Call(202) 708-9396

Would like to e-mail DMD aquestion

IPOS_Default_Management_DMsion©ed.gov


235

Cohort,clefatilt rate appeal-submis§iiiiii will NOT beaceePtedviae-mail

Page 1

Appendix C

Page 2

Department Contacts

If -Vpd... ,. ,

',.-Contact...: -,

Need copies of the Department'sregulations; "Dear Colleague"letters, or other student aidpublications

U.S. Department of EducationFederal Student Aid

Information CenterP.O. Box 84Washington, DC 20044-0084

(800) 433-3243http://ifap.ed.gov

Have questions about collectionof individual defaulted loans:assigned to the Department .

. U.S. Department of EducationDebt Collection Service (DCS)Student Receivables DivisionROB-.3, Room 5118600 Independence Avenue, SWWashington, DC 20202-5320

(800) 621-3115

Need information on lender orguaranty agency cohort defaultrates

U.S. Department of EducationGuarantor and Lender Oversight

Service (GLOS)ROB-3, Room 4616600 Independence Avenue, SWWashington, DC 20202-5138

(202) 401-7482

Have questions about. recertification, audit resolution,financial analysis, programreview, and institutionimprovement

U.S. Department of EducationInstitutional Participation and

Oversight Service (IPOS)ROB-3, Room 39157th and D Streets, SWWashington, DC 20407

(202) 205-0183

- 236


AbITswjalons End

Acronyms

These shortened forms often appear in cohort default rate loan record detail reports, onspreadsheets, and throughout various appeal instructions.

BCD

BUD

CDR

CPD

DD

DER

DF

Beginning Class Date

Backup Data(Loan Record Detail Report)

Cohort Default Rate

Claim Paid Date

Default Date

Date Entered Repayment

Default

DL Direct Loan

DLS Direct Loan Servicer

DD Default Management Division

ECD Ending Class Date

FDLP Federal Direct Loan Program

FIFEL Federal Family Education Loan

GA Guaranty Agency

Income Contingent RepaymentOCR

OCRD

LDA

LIG-1

LSIT

LRDR

Income Contingent RepaymentDate

Last Day of Attendance

Less-Than-Half-Time

Limitation, Suspension, orTermination


likleg-am Negative Amortization

RISLDS National Student Loan DataSystem

OSD Out of School Date

SLS Supplemental Loan for Students

SSC R Student Status ConfirmationReport

Subsidized Stafford Loan

Stafford

SSL

SF

MoteFor loan status codes andclaim reason codes used in theLoan Record Detail Report,see pages 25 and 26,respectively.


237

:igan[inerra Pans off theEnd Ms Easd

Megulletiorno

:111

Appendix ElHigher Education Act of 1965, As Amended (HEA) 3

HEA of 1965, Sec. 435Definitions for Student LoanInsurance Program 3

Appendix E2

Regulations Governing Default Reduction and PreventionMeasures 9

34 Code of Federal Regulations (CFR), Sec. 668.17Default Reduction and Prevention Measures 9


238

-Ls gherAct aq '19639 seEmended ff.H_ b_,Z14

[This section is an unofficial version of portions of Section 435 of theHEA of 1965. The Department has made every effort to ensure theaccuracy of this statute contained in this unofficial version.However, the official version of this statute is found in the UnitedStates Code.]

SEC. 435. DEFINITIONS FORSTUDENT LOAN INSURANCEPROGRAM.

As used in this part:

(a) Eligible Institution.--

(1) IN GENERAL.

Except as provided in paragraph (2), the term "eligibleinstitution" means an institution of higher education, as definedin section 481, except that, for the purposes of sections427(a)(2)(C)(i) and 428(b)(1)(M)(i), an eligible institutionincludes any institution that is within this definition withoutregard to whether such institution is participating in anyprogram under this title and includes any institution ineligiblefor participation in any program under this part pursuant toparagraph (2) of this subsection.

(2)Ineligibility based on high default rates.

(AAn institution whose cohort default rate is equal to orgreater than the threshold percentage specified insubparagraph (B) for each of the three most recent fiscalyears for which data are available shall not be eligible toparticipate in a program under this part for the fiscal yearfor which the determination is made and for the two

ULF

'Eligible- institution

Loss of eligibility based ou higbcohort default sates


233

Appendix ElPertinent Parts of the HEA

Erroneous data

Exceptional mitigatingcircumstances

Cohort default ratethreshold

Institutions exempt fromloss of eligibility based on

cohort default rates

succeeding fiscal years, unless, within 30 days ofreceiving notification from the Secretary of the loss ofeligibility underthis paragraph, the institution appeals theloss of its eligibility to the Secretary. The Secretary shallissue a decision on any such appeal within 45 days afterits submission. Such decision may permit the institution tocontinue to participate in a program under this part if--

(i) the institution demonstrates to the satisfaction of theSecretary that the Secretary's calculation of its cohortdefault rate is not accurate, and that recalculationwould reduce its cohort default rate forany of the threefiscal years below the threshold percentage specifiedin subparagraph (B); or

(ii) there are, in the judgment of the Secretary, exceptionalmitigating circumstances thätwould make theapplication of this paragraph inequitable.

During such appeal, the Secretary may permit theinstitution to continue to participate in a program underthis part.

(B) For purposes of determinations under subparagraph (A),the threshold percentage is--

(i) 35 percent for fiscal year 1991 and 1992;

(ii) 30 percent for fiscal year 1993; and

(iii) 25 percent for any succeedihg fiscal year.

(C) Until July 1, 1998, thisparagraph shall not apply to anyinstitution that is--

(I) a part B institution within the meaning ofsection 322(2) of this Act;

(ii) a tribally controlled community college within themeaning of section 2(a)(4) of the Tribally ControlledCommunity College Assistance Act of 1978; or

(iii) a Navajo Community College under the NavajoCommunity College Act.


240

Appendix El

(3)' Appeals Based Upon Allegations of Improper LoanServicing.--An institution that--

(A) is subject to loss of eligibility for the Federal FamilyEducation Loan Program pursuant to paragraph (2)(A) ofthis subsection;

(B) is subject to loss of eligibility for the FederalSupplemental Loans for Students pursuant to section428A(a)(2); or

(C) is an institution whose cohort default rate equals orexceeds 20 per-Cent for the most recent year for which dataare available;

may include in its appeal of such loss or rate a defense basedon improper loan servicing (in addition to other defenses). Inany such appeal, the Secretary shall take whatever steps arenecessary to ensure that such institution has access to arepresentative sample (as determined by the Secretary) of therelevant loan servicing and collection records of the affectedguaranty agencies and loan servicers for a reasonable periodof time, not to exceed 30 days. The Secretary shall reduce theinstitution's cohort default rate to reflect the percentage ofdefaulted loans in the representative sample that are requiredto be excluded pursuant to subsection (m)(1)(B).

[Sections (d) through (t) and (0 through (I) have not been reprintedhere and Sections (b), (c), (g), and (h) have been repealed.]

(m) Cohort Default Rate.--

(1) In General.--

(A) Except as provided in paragraph (2), the term "cohortdefault rate" means, for any fiscal year in which 30 or morecurrent and former students at the institution enterrepayment on loans under section 428, 428A, or 428H,received for attendance at the institution, the percentage ofthose current and former students who enter repayment onsuch loans (or on the portion of a loan made under section428C that is used to repay any such loans) received for

1. Section 5(b)(8) of the Higher Education Technical Amendments of 1993 provides asfollows: (8) Cohort default rate determinations.--The amendments made to subsection(a)(3) and (m)(1)(B) of section 435 of this Act shall apply with respect to thedetermination (and appeals from determinations) of cohort default rates for fiscal year1989 and any succeeding fiscal year.

Pertinent Parts of the HEA

-.improper loan servicing ,

"Institntionalaccess ta,loanservicing and callection',

recordS'

'defaultrate:-;,-


241

Appendix El Pertinent Parts of the HEA

`1-

2DeterniiiiiniAe ituniber 'Of

r.Ohort defanit rate for

'- :Schools with fewer than30 bOrroWers

attendance at that institution in that fiscal year who defaultbefore the end of the following fiscal year. The Secretaryshall require that each guaranty agency that has insuredloans for current orformer students of the institution affordsuch institution a reasonable opportunity (as specified bythe Secretary) to review and correct errors in theinformation required to be provided to the Secretary by theguaranty agency forthe purposes of calculating a cohortdefault rate for such institution, prior to the calculation ofsuch rate.

(B) In determining the number of students who default beforethe end of such fiscal year, the Secretary shall include onlyloans for which the Secretary or a guaranty agency haspaid claims for insurance, and, in considering appeals withrespect to cohort default rates pursuant to subsection(a)(3), exclude any loans which, due to improper servicingor collection, would, as demonstrated by the evidencesubmitted in support of the institution's timely appeal to theSecretary, result in an inaccurate or incomplete calculationof such cohort default rate.

(C) For any fiscal year in which fewer than 30 of the institution'scurrent and former students enter repayment, the term"cohort default rate" means the percentage of such currentand former students who entered repayment on such loans(or on the portion of a loan made under section 428C thatis used to repay any such loans) in any of the three mostrecent fiscal years, who default before the end of the fiscalyear immediately following the year in which they enteredrepayment.

(2) Special Rules.--

(A) In the case of a student who has attended and borrowed atmore than one school, the student (and such student'ssubsequent repayment or default) is attributed to each .

school for attendance at which the student received a loanthat entered repayment in the fiscal year.

(B) A loan on which a payment is made by the school, suchschool's owner, agent, contractor, employee, or any otherentity or individual affiliated with such school, in order toavoid default by the borrower, is considered as in defaultfor purposes of this subsection.


242


(C) Any loan which has been rehabilitated before the end ofsuch following fiscal year is not considered as in default forthe purposes of this subsection.

(D) For the purposes of this subsection, a loan made inaccordance with section 428A (or the portion of a loanmade under section 428C that is used to repay a loanmade under section 428A) shall not be considered to enterrepayment until after the borrower has ceased to beenrolled in a course of study leading to a degree orcertificate at an eligible institution on at least a half-timebasis (as determined by the institution) and ceased to be ina period of forbearance based on such enrollment. Eacheligible lender of a loan made under section 428A (or aloan made under section 428C a portion of which is used torepay a loan made under section 428A) shall provide theguaranty agency with the information necessary todetermine when the loan entered repayment for purposes ofthis subsection, and the guaranty agency shall provide suchinformation to the Secretary.

(3) Regulations to Prevent Evasions.--

The Secretary shall prescribe regulations designed to preventan institution from evading the application to that institution of adefault rate determination under this subsection through the useof such measures as branching, consolidation, change ofownership or control, or any similar device.

(4) Collection and Reporting of Cohort Default Rates.--

(A) The Secretary shall collect data from all insurers under thispart and shall publish not less often than once every fiscalyear a report showing default data for each category ofinstitution, including

(i) 4-year public institutions,

(ii) 4-year private institutions,

(iii) 2-year public institutions,

(iv) 2-year private institutions,

(v) 4-year proprietary institutions,

(vi) 2-year proprietary institutions, and

(vii) less than 2-year proprietary institutions.


243

ColleCting,and:official cOhOi't

Paje 7


(B) The Secretary may designate such additionalsubcategories within the categories specified insubparagraph (A) as the Secretary deems appropriate.

(C)The Secretary shall publish not less often thanonce everyfiscal year a report showing default data for each institutionfor which a cohort default rate is calculated under thissubsection.

[Section (n) has been repealed. Section (o) is not reprinted here.]


244

Megulaoras Oovernnng-19ffEut1 ReducUon andPTevenUorn] Mean] MO

[This section is an unofficial version of 34 CFR 668.17. TheDepartment has made every effort to ensure the accuracy of theregulations contained in this unofficial version. However, the onlyofficial versions of this regulation are those published in the FederalRegister and in the Coda of Federal Regulations.]

SEC. 668.17 DEFAULT REDUCTIONN L REVENTIIL tEASUES .

(a) Default rates.

(1) If the FFEL Program cohort default rate, Direct Loan Programcohort rate, or if applicable, weighted average cohort rate foran institution exceeds 20 percent for any fiscal year, theSecretary notifies the institution of that rate.

(2) The Secretary may initiate a proceeding under subpart G ofthis part to limit, suspend, or terminate the participation of aninstitution in the Title IV, HEA programs, if the institution has anFFEL Program cohort default rate, Direct Loan Programcohort rate, or a weighted average cohort rate that exceeds 40percent for any fiscal year.

(3) Unless an institution is subject to loss of eligibility toparticipate in the FFEL Program under paragraph (b)(1) of thissection, the Secretary initiates a proceeding under subpart Gof this part to limit, suspend, or terminate an institution'sparticipation in the FFEL Program if the institution, for each ofthe three most recent consecutive fiscal years, has anycombination of an FFEL Program cohort default rate, a DirectLoan Program cohort rate, or weighted average cohort ratethat is equal to or greater than 25 percent.

Notification to,schools withcohort default rates greater

than 20 percent

Possible limitation, suspension,or termination (LS&T)

for schoob with cohort defaultrates greeter than 40:0 percent


245

Appendix E2

End of participation inFFELProgram and/or.

Direct Loan Program forcohort default rates that

exceed thresholds

_

Period during which': instit--tions withcohort defeilltrites over ilfresholds are

, ineligible ,to:participate in,FFEL Prngram and/orDireCt-

` Lcian Program

Page 10

Pertinent Parts of Related Regulations

(4) The Secretary may require an institution that meets the criteriaunder paragraph (a)(2) of this section to submit to theSecretary, within a time frame determined by the Secretary,any reasonable information to help the Secretary make apreliminary determination as to what action should be takenagainst the institution.

(5) The Secretary ceases any limitation, suspension, ortermination action against an institution under this paragraph ifthe institution satisfactorily demonstrates to the Secretary that,pursuant to an appeal that is complete and timely submittedunder paragraph (c) of this section, the institution meets one ofthe exceptional mitigating circumstances under paragraph(c)(1)(ii)(B) of this section.

(b) End of participation.

(1) Except as provided in paragraph (b)(6) of this section, aninstitution's participation in the FFEL Program ends 30calendar days after the date the institution receives notificationfrom the Secretary that its FFEL Program cohort default ratefor each of the three most recent fiscal years for which theSecretary has determined the institution's rate, is equal to orgreaterthan 25 percent.

(2) Except as provided in paragraph (b)(6) of this section, aninstitution's participation in the Direct Loan Program ends30 calendar days after the date the institution receivesnotification from the Secretary that for each of the three mostrecent fiscal years the institution has any combination of anFFEL Program cohort default rate, Direct Loan Programcohort rate, or weighted average cohort rate that is equal to orgreaterthan 25 percent.

(3) Except as provided in paragraph (b)(6) of this section, aninstitution's participation in the FFEL Program or Direct LoanProgram ends under paragraph (b) (1) or (2) of this sectionrespectively may not participate in that program on or after the30th calendar day after the date it receives notification from theSecretary that its FFEL Program cohort default rate, DirectLoan Program cohort rate, or, if applicable, weighted averagecohort rate exceeds the thresholds specified in paragraph(b)(1) or (2) of this section and continuing--

(i) For the remainder of the fiscal year in which the Secretarydetermines that the institution's participation has endedunder paragraph (b) (1) or (2) of this section; and


Appendix E2

(ii) For the two subsequent fiscal years.

(4) An institution whose participation in the FFEL Program orDirect Loan Program ends under paragraph (b)(1) or (2) of thissection may not participate in that program until the institutionsatisfies the Secretary that the institution meets allrequirements for participation in the FFEL Program or DirectLoan Program and executes a new agreement with theSecretary for participation in that program following the perioddescribed in paragraph (b)(3) of this section.

(5) Until July 1, 1998, the provisions of paragraph (b)(1) or (2) ofthis section and the provisions of 34 CFR 668.16(m) do notapply to a historically black college or university within themeaning of section 322(2) of the HEA, a tribally controlledcommunity college within the meaning of section 2(a)(4) of theTribally Controlled Community College Assistance Act of1978, or a Navajo community college underthe NavajoCommunity College Act.

(6) An institution may, notwithstanding 34 CFR 668.26, continue toparticipate in the FFEL Program or Direct Loan Program untilthe Secretary issues a decision on the institution's appeal ifthe Secretary receives an appeal that is complete, accurate,and timely in accordance with paragraph (c) of this section.

(c) Appeal procedures.

(1 An institution may appeal the loss of participation in the FFELProgram or Direct Loan Program under paragraph (b)(1) or (2)of this section by submitting an appeal in writing to theSecretary by the 30th calendar day following the date theinstitution receives notification of the end of participation. Anappeal or any portion of an appeal under this section will notbe accepted after the 30th calendar day following the date theinstitution receives notification from the Secretary that it haslost its eligibility to participate in the FFEL or Direct Loanprograms, except that an institution may submit an appealunder section (c)(1)(i) of this section later than the 30thcalendar day if the appeal is submitted in accordance withparagraph (c)(8) and the information required by paragraph(c)(7) may be submitted in accordance with that paragraph.The appeal must include all information required by theSecretary to substantiate the appeal and all information mustbe submitted in a format prescribed by the Secretary. Theadditional 30-day period specified in paragraph (c)(7) of this


Institutions that areexempt from cohort default

rate sanctions

Appeal procedures andtime -frames


247

Appendix E2 Pertinent Parts of Related Regulations

.Erioneous data appeal

Eiceptional mitigatingcircuMstances appeal

Participation rateindex criterion

section is an extension for the submission of the auditor'sstatement only and does not affect the date by which the appealdata must be submitted. An institution that is eligible for anextension under paragraph (c)(8) of this section must submit allrequired data within five working days following the agency'sresponse to the institution's request for verification of data. Theinstitution may appeal on the grounds that--

(i) (A) The calculation of the institution's FFEL Program cohortdefault rate, Direct Loan Program cohort rate, or, ifapplicable, weighted average cohort rate, for any of thethree fiscal years relevant to the end of participation isnot accurate; and

(B) A recalculation of the institution's FFEL Program cohortdefault rate, Direct Loan Program cohort rate, orweighted average cohort rate, with corrected dataverified by the cognizant guaranty agencyor agenciesfor the FFEL Program loans, or the Secretary for DirectLoan Program loans, would produce an FFEL Programcohort default rate, a Direct Loan Program cohort rate,or weighted average cohort rate for any of those fiscalyears that is below the threshold percentage specified inparagraph (b) (1) or (2) of this section; or

(ii) The institution meets one of the following exceptionalmitigating circumstances:

(A) The institution has a participation rate index of 0.0375or less. The participation rate index is determined bymultiplying the institution's FFEL Program cohort defaultrate, Direct Loan Program cohort rateor weightedaverage cohort rate, by the percentage of theinstitution's regular students, as defined in 34 CFR600.2, enrolled on at least a half-time basis whoreceived a loan made under either the FFEL Programor Direct Loan Program for a 12-month period that hasended during the six months immediately preceding thefiscal year for which the cohort of borrowers used tocalculate the institution's rate is determined. Aninstitution that has an FFEL Program cohortdefault rate,Direct Loan Program cohort rate, or weighted averagecohort rate that exceeds 40 percent may not appeal itsloss of eligibility under paragraphs (b) (1) or (2) of thissection on the basis of its participation rate index.


248


(B) For a 12-month period that has ended during the sixmonths immediately preceding the fiscal year for whichthe cohort of borrowers used to calculate theinstitution's rate is determined, 70 percent or more ofthe institution's regular students, as defined in 34 CFR600.2, are individuals from disadvantaged economicbackgrounds, as established by documentary evidencesubmitted by the institution. Such evidence must relateto either qualification by those students for an expectedfamily contribution (EFC) of zero for any award yearthat generally coincides with the 12-month period, orattribution to those students of an adjusted grossincome of the student and his or her parents or spouse,if applicable, reported for any award year that generallycoincides with the 12-month period, of less than thepoverty level, as determined under criteria establishedby the Department of Health and Human Services; and,

(1) For a degree-granting institution, 70 percent ormore of the institution's regular students who wereinitially enrolled on a full-time basis and werescheduled to complete their programs during thesame 12-month period the institution has chosen todetermine the percentage of its students that comefrom disadvantaged economic backgrounds underparagraph (c)(1)(ii)(B) of this section, completed theeducational programs in which they were enrolled.This rate is calculated by comparing the number ofregular students who were classified as full-time attheir initial enrollment in the institution and wereoriginally scheduled, at the time of enrollment, tocomplete their programs within the relevant 12-month period, with the number of these studentswho received a degree from the institution;transferred from the institution to a higher leveleducational program; or, at the end of the 12-monthperiod, remained enrolled and were makingsatisfactory academic progress toward completionof their educational programs; or

(2) For a non-degree-granting institution, theinstitution had a placement rate of 50 percent ormore with respect to its former regular students whoremained in the program beyond the point thestudents would have received a 100 percent tuitionrefund from the institution. A student or former

Economicallydisadvantaged rate

2

COMgetion rate fOrdegree7granting schools

Placement rate'for:,`1-non-degree-granting schools '`


249


Scheduled tO COmPlete'

Period during which institu-tions with cohort defaultrates over thresholds are

ineligible to participate inFFEL Program and/or Direct

Loan Program

student may not be considered successfully placed ifthe institution is the student's or former student'semployer. This rate is based on those regularstudents who were initially enrolled on at least a half-time basis and were originally scheduled, at the timeof enrollment, to complete their educationalprograms during the same 12-month period theinstitution has chosen to determine the percentageof its students that come from disadvantagedeconomic backgrounds under paragraph (c)(1)(ii)(B)of this section. This rate does not include thosestudents who are still enrolled and makingsatisfactory progress in the educational programs inwhich they were originally enrolled on the datefollowing 12 months after the date of the student'slast day of attendance. This rate is calculated bydetermining the percentage of all those formerregularstudents who;

(i) Are employed in an occupation for which theinstitution provided training on the date following12 months after the date of their last day ofattendance at the institution; or

(ii) Were employed in an occupation for which theinstitution provided training for at least 13 weeksbefore the date following 12 months after thedate of their last day of attendance at theinstitution.

(2) For purposes of the Completion rate and placement ratedescribed in paragraph (c)(1)(ii)(B) (1) and (2) of this section, astudent is originally scheduled, at the time of enrollment, tocomplete the educational programon the date when thestudent will have been enrolled in the program for the amount oftime normally required to complete the program. The "amountof time normally required to complete the program" for astudent who is initially enrolled full-time is the period of timespecified in the institution's enrollment contract, catalog, orother materials, for completion of the program by a full-timestudent, or the period of time between the original date ofenrollment and the anticipated graduation date appearing onthe student's loan application, if any, whichever is less. The"amount of time normally required to complete the program" fora student who is initially enrolled less than full-time is theamount of time it would take that student to complete theprogram if the student remained enrolled at that level ofenrollment.

250



(3) The Secretary issues a decision on the institution's appealwithin 45 calendar days after the institution submits a completeappeal that addresses the applicable criteria in paragraph(c)(1) (i) or (ii) of this section to the Secretary.

(4) The Secretary's decision is based on the consideration ofwritten material submitted by the institution. No oral hearing isprovided.

(5) The Secretary withdraws the notification of loss of participationin the FFEL Program or Direct Loan Program sent to aninstitution under paragraph (b) (1) or (2) of this section, if hedetermines that the institution's appeal satisfies one of theexceptional mitigating circumstances specified in paragraph(c)(1) (i) or (ii) of this section.

(6) An institution must include in its appeal a certification, underpenalty of perjury, by the institution's chief executive officerthatall information provided by the institution in support of itsappeal is true and correct.

(7) An institution that appeals on the grounds that it meets theexceptional mitigating circumstances criteria contained inparagraph (c)(1)(ii) of this section must include in its appeal anopinion from an independent auditor on management'sassertions that the information contained in the appeal iscomplete, accurate, and determined in accordance with therequirements of this section. The examination levelengagement will be performed in accordance with Statementon Standards for Attestation Engagements #3. This opinionmust be received by the Secretary within 60 days following thedate the institution receives notification of its loss of eligibilityunder paragraph (b) of this section.

(8) An institution that appeals under paragraph (c)(1)(i) of thissection will not lose its eligibility to continue to participateduring the appeal process due to a guaranty agency's failure tocomply with 34 CFR 682.401(b)(14) which requires the agencyto respond to an institution's request for verification of datawithin 15 working days, provided the institution:

(i) Requested such verification within 10 working days fromthe date it received notification of its loss of eligibility underparagraph (b) of this section; and

,

Required certiniationby the school's chief

executive officer

Independent auditor -

attestation: requirement,

Guaranty agency's failure,to_timely respond to school's _

request for verification of data

'School's Aimelyr_initiatedapPeals:,


231

Appendix E2

F;FEL Program cohortdefault. rate


(ii) Provided a copy of the request for verification of data to theSecretary at the same time it requested such verification bythe relevant guaranty agency(ies).

(d) FFEL Program Cohort Default Rate.

. (1)(i) For purposes of the FFEL Program, except as provided inparagraph (d)(1)(ii) of this section, the term FFEL Programcohort default rate means

(A) For any fiscal year in which 30 or more current and formerstudents at the institution enter repayment on FederalStafford loans or Federal SLS loans (or on the portion ofaloan made under the Federal Consolidation Loan Programor Direct Consolidation Loan Program that is used to repaysuch loans) received for attendance at the institution, thepercentage of those current and former students who enterrepayment in that fiscal year on those loans who defaultbefore the end of the following fiscal year; or

(B) For any fiscal year in which fewer than 30 of theinstitution's current and former students enter repayment onFederal Stafford loans or Federal SLS loans (or on theportion of a loan made under the Federal ConsolidationLoan Program or Direct Consolidation Loan Program thatis used to repay such loans) received for attendance at theinstitution, the percentage of those current and formerstudents who entered repayment on such loans in any of thethree most recent fiscal years, who default before the end ofthe fiscal year immediately following the fiscal year in whichthey entered repayment.

(C) In determining the number of students who default beforethe end of that following fiscal year, the Secretary includesonly loans for which the Secretary or a guaranty agency haspaid claims for insurance, and Direct Consolidation LoanProgram loans that repaid FFEL Program loans thatentered default.

(ii)(A) In the case of a student who has attended andborrowed at more than one institution, the student (andhis or her subsequent repayment or default) is attributedto each institution for attendance at which the studentreceived a loan that entered repayment in the fiscalyear.


252

Append& E2

(B)A loan on which a payment is made by the institution, itsowner, agent, contractor, employee, or any otheraffiliated entity or individual, in order to avoid default bythe borrower, is considered as in default for purposes ofthis definition.

(C)Any loan that has been rehabilitated under section 428Fof the HEA before the end of that following fiscal year isnot considered as in default for purposes of thisdefinition.

(D)For the purposes of this definition, an SLS loan made inaccordance with section 428A of the HEA (or a loanmade under the Federal Consolidation Loan Programor Direct Consolidation Loan Program, a portion ofwhich is used to repay a Federal SLS loan) shall not beconsidered to enter repayment until afterthe borrowerhas ceased to be enrolled in an educational programleading to a degree, certificate, or other recognizededucational credential at the participating institution onat least a half-time basis (as determined by theinStitution) and ceased to be in a period of forbearanceor deferment based on such enrollment. Each eligiblelender of a loan made under section 428A (or a loanmade under the Federal Consolidation Loan Program,a portion of which is used to repay a Federal SLS loan)of the HEA shall provide the guaranty agency with theinformation necessary to determine when the loanentered repayment for purposes of this definition, andthe guaranty agency shall provide that information to theSecretary.

(2) Fiscal year means the period from and including October 1 ofa calendar year through and including September 30 of thefollowing calendar year.

(e) Direct Loan Program cohort rate.

(1) For purposes of the Direct Loan Program, except as providedin paragraph (e)(2) of this section, the Secretary calculatesDirect Loan Program cohort rates using the following formulas:

(i) For public institutions, private nonprofit institutions,or proprietary degree-granting institutions--

(A)For any fiscal year in which 30 or more current andformer students at the institution enter repayment on a


Schools.that pay on loank toavoid borrower default

Rehabilitated loans

Date entered repayment forSLS Loans-

Mica! year

,

Diiect Loan Program'cOhortiefault rates fordegree-granting sChools


253


Direct Loan Programcohort rate for proprietary

non-degree-grantingschools

Direct Loan Program loan (or on the portion of a loanmade under the Federal Direct Consolidation LoanProgram that is used to repay those loans) received forattendance at the institution, the percentage of thosecurrent and former students who enter repayment in thatfiscal year on those loans who are in default before theend of the following fiscal year; or

(B) For any fiscal year in which fewer than 30 of theinstitution's current and former students enter repaymenton a Direct Loan Program loan (or on the portion of aloan made under the Federal Direct Consolidation LoanProgram that is used to repay those loans) received forattendance at the institution, the percentage of thosecurrent and former students who entered repayment onthose loans in any of the three most recent fiscal years,who are in default before the end of the fiscalyearimmediately following the year in which they enteredrepayment.

(ii) For proprietary non-degree-granting institutions--

(A)For any fiscal year in which 30 or more current andformer students at the institution enter repayment on aDirect Loan Program loan (or on the portion of a loanmade under the Federal Direct Consolidation LoanProgram that is used to repay those loans) received forattendance at the institution, the percentage of thosecurrent and former students who enter repayment in thatfiscal yearon those loans who are in default before theend of the following fiscal year, or who, before the end ofthat following fiscal year, have for 270 days: been inrepayment underthe income-contingent repayment planwith scheduled payments that are less than 15 dollarsper month and those payments result in negativeamortization; or

(B) For any fiscal year in which fewer than 30 of theinstitution's current and former students enter repaymenton a Direct Loan Program loan (or on the portion ofaloan made under the Federal Direct Consolidation LoanProgram that is used to repay those loans) received forattendance at the institution, the percentage of thosecurrent and former students who entered repayment onthose loans in any of the three most recent fiscal years,who are in default before the end of the fiscalyearimmediately following the year in which they entered


254


repayment, or who, before the end of that followingfiscal year, have tor 270 days: been in repayment underthe income-contingent repayment plan with scheduledpayments that are less than 15 dollars per month andthose payments result in negative amortization.

(2) (i) In the case of a student who has attended and borrowed atmore than one institution, the student (and his or hersubsequent repayment or default) is attributed to eachinstitution for attendance at which the student received aloan that entered repayment in the fiscal year.

(ii) A loan on which a payment is made by the institution, itsowner, agent, contractor, employee, or any other affiliatedentity or individual, in order to avoid default by the borrower,is considered as in default for purposes of this definition.

(iii)Any loan on which the borrower has made 12 consecutivemonthly on-time payments under 34 CFR 685.211(e)before the end of that following fiscal year is not consideredas in default for purposes of this definition.

(3) For purposes of an institution's Direct Loan cohort rate, aDirect Loan Program loan is considered in default when theborrower's or endorser's failure to make an installmentpayment when due has persisted for 270 days.

(0(1) Weighted average cohort rate.

For purposes of an institution that has former students enteringrepayment in a fiscal year on both Direct Loan Program andFFEL Program loans, except as provided under paragraph(0(2) of this section, the Secretary calculates a weightedaverage cohort rate using the following formulas:

(i) For public institutions, private nonprofit institutions,or proprietary degree-granting institutions--

(A)For any fiscal year in which 30 or more current andformer students at the institution enter repayment on anFFEL Program or Direct Loan Program loan (or on theportion of a loan made under the Federal ConsolidationLoan Program or Federal Direct Consolidation LoanProgram that is used to repay those loans) received forattendance at the institution, the percentage Of thosecurrent and former students who enter repayment in thatfiscal year on those loans who are in default before the

Students who attend and:borrow at more than

one school

Schoois that pay onloans to avoid bOrrower

defaults

, Rehabilitated- loans

-DORI-program cohortdefault rites for 'degree-

granting 'schonls


255


Dial-progranicohoi1ratesTor proprietary aon-degree-granting schools

end of the following fiscal year; and

(B) For any fiscal year in which fewer than 30 of theinstitution's current and former students enter repaymenton an FFEL Program or Direct Loan Program loan (oron the portion of a loan made under the FederalConsolidation Loan Program or Federal DirectConsolidation Loan Program that is used to repay suchloans) received for attendance at the institution, thepercentage of those current and former students whoentered repayment on such loans in the three mostrecent fiscal years, who are in default before the end ofthe fiscal year immediately following the year in whichthey entered repayment.

(ii) For proprietary non-degree-granting institutions--

(A)For any fiscal year in which 30 or more current andformer students at the institution enter repayment on anFFEL Program or Direct Loan Program loan (or on theportion of a loan made under the Federal ConsolidationLoan or Federal Direct Consolidation Loan Programthat is used to repay those loans) received forattendance at the institution, the percentage of thosecurrent and former students who enter repayment in thatfiscal year on such loans who are in default before theend of the following fiscal year, or who, before the end ofthat following fiscal year, have for 270 days: been inrepayment underthe income-contingent repayment planwith scheduled payments that are less than 15 dollarsper month and those payments result in negativeamortization; or

(B) For any fiscal year in which fewer than 30 of theinstitution's current and former students enter repaymenton an FFEL Program or Direct Loan Program loan (oron the portion of a loan made under the FederalConsolidation Loan Program or Federal DirectConsolidation Loan Program that is used to repay thoseloans) received for attendance at the institution, thepercentage of those current and former students whoentered repayment on those loans in any of the threemost recent fiscal years, who are in default before theend of the fiscal year immediately following the year inwhich they entered repayment, or who, before the end ofthat following fiscal year, have for 270 days: been in


256


repayment underthe income-contingent repayment planwith scheduled payments that are less than 15 dollarsper month and those payments result in negativeamortization.

(2) (i) In the case of a student who has attended and borrowed atmore than one institution, the student (and his or hersubsequent repayment or default) is attributed to eachinstitution for attendance at which the student received aloan that entered repayment in the fiscal year.

(ii) A loan on which a payment is made by the institution, itsowner, agent, contractor, employee, or any other affiliatedentity or individual, in order to avoid default by the borrower,is considered as in default for purposes of this definition.

(iii) Any Direct Loan Program loan on which the borrower hasmade 12 consecutive monthly on-time payments under 34CFR 685.211(e) or has an FFEL Program loan that hasbeen rehabilitated under section 428F of the HEA beforethe end of that following fiscal year is not considered as indefault for purposes of this definition.

(3) For purposes of an institution's weighted average cohort rate,a Direct Loan Program loan is considered in default when aborrower's or endorser's failure to make an installmentpayment when due has persisted for 270 days.

(g) Applicability of Rates to Institutions.

(1) (i) An FFEL Program cohort default rate, Direct LoanProgram cohort rate, or weighted average cohort rate of aninstitution applies to all locations of the institution as theinstitution exists on the first day of the fiscal year for which therate is calculated.

(ii) An FFEL Program cohort default rate, Direct LoanProgram cohort rate, or weighted average cohort rate of aninstitution applies to all locations of the institution from thedate the institution is notified of that rate until the institutionis notified by the Secretary that the rate no longer applies.

(2) (i) Foi- an institution that changes its status from that ofalocation of one institution to that of a free-standing


257

Students who attend andborrow at more than

one school

Scbools that pay on loans toavoid borrower default

Rehabilitated loans

Determining Direct LoanProgram defaults

Cohort default rates forschools that change status

Page 21

1Improper loan servicing andc011ection appeal .


institution, the Secretary determines the FFEL Programcohort default rate, Direct Loan Program cohort rate, orweighted average cohort rate, based on the institution'sstatus as of October 1 of the the fiscal year for which therate is being calculated.

(ii) For an institution that changes its status from that of a free-standing institution to that of a location of another institution,the Secretary determines the FFEL Program cohort defaultrate, Direct Loan Program cohort rate, or weightedaverage cohort rate, based on the combined number ofstudents who enter repayment during the applicable fiscalyear and the combined number of students who defaultduring the applicable fiscal years from both the former free-standing institution and the other institution. This rateapplies to the new, consolidated institution and all of itscurrent locations.

(iii)For free-standing institutions that merge to form a new,consolidated institution, the Secretary determines theFFEL Program cohort default rate, Direct Loan Programcohort rate, or weighted average cohort rate based on thecombined number of students who enter repayment duringthe applicable fiscal year and the combined number ofstudents who default during the applicable fiscal years fromall of the institutions that are merging. This rate applies tothe new consolidated institution.

(iv)For a location of one institution that becomes a location ofanother institution, the Secretary determines the FFELProgram cohort default rate, Direct Loan Program cohortrate, or weighted average cohort rate based on thecombined number of students who enter repayment duringthe applicable fiscal year and the number of students whodefault during the applicable fiscal years from both of theinstitutions in their entirety, not limited solely to therespective locations.

(h) Appeal based on allegations of improper loan servicing orcollection--

(1) General.

An institution that is subject to loss of participation in the FFELprograms under paragraph (a)(1) of this section or has beennotified by the Secretary that its cohort default rate equals orexceeds 20 percent for the most recent year for which data are


2 5 8


available may include in its appeal of that loss or rate achallenge based on allegations of improper loan servicing orcollection. This challenge may be raised in addition to otherchallenges permitted underthis section.

(2) Standard of review.

An appeal based on allegations of improper loan servicing orcollection must be submitted to the Secretary in accordancewith the requirements of this paragraph. The Secretaryexcludes any loans from the cohort default rate calculationwhich, due to improper servicing or collection, would, asdemonstrated by the evidence submitted in support of theinstitution's timely appeal to the Secretary, result in aninaccurate or incomplete calculation of the cohort default rate.

(3) Procedures.

(i)The following procedures apply to appeals from cohortdefault rates issued by the Secretary during Federal fiscalyear 1994 and subsequent years. Upon receiving noticefrom the Secretary that the institution's cohort default rateexceeds the thresholds-specified in paragraph (c)(2) of thissection or that its most recent cohort default rate equals orexceeds 20 percent, the institution may appeal thecalculation of the cohort default rate based on allegations ofimproper loan servicing or collection. The Secretary'snotice includes a list of all borrowers included in the'calculation of the institution's cohort default rate.

(ii) To initiate an appeal under this paragraph, the institutionmust notify, in writing, the Secretary and each guarantyagency that guaranteed loans included in the institution'scohort default rate that it is appealing the calculation of thecohort default rate. The notification must be received bythe guaranty agency and the Secretary within 10 workingdays of the date the institution received the Secretary'snotification. The institution's notification to the guarantyagency must include a copy of the list of students providedby the Secretary to the institution.

(iii)Within 15 working days of receiving the notification from aninstitution subject to loss of participation in the FFELprograms under paragraph (a)(1), or within 30 calendardays of receiving such notification from any other institutionthat may file a challenge to its default rate under this

:initiatingaIoanservking andcollection appeal


259


Selecting a representativesample of loan servicing

records

Fee for loan servicingrecords

paragraph, the guaranty agency must provide the institutionwith a representative sample of the loan servicing andcollection records relating to borrowers whose loans wereguaranteed by the guaranty agency and that were includedas defaulted loans in the calculation of the institution'scohort default rate. For purposes of this section, the term"loan servicing and collection records" refers only to therecords submitted by the lender to the guaranty agency tosupport the lender's submission of a default claim andincluded in the claim file. In selecting the representativesample of records, the guaranty agency must use thefollowing procedures:

(A) The guaranty agency shall list in social security numberorder all loans made to borrowers for attendance at theinstitution and guaranteed by the guarantyagency andincluded as defaulted loans in the calculation of thecohort default rate which is being challenged by theinstitution.

(B) From the population of loans identified by the guarantyagency, the guaranty agency shall identify a sample ofthe loans. The sample must be of a size such that theuniverse estimate derived from the sample isacceptable at a 95 percent confidence level with a plusor minus 5 percent confidence interval. The samplingprocedure must result in a determination of the numberof loans that should be excluded from the calculation ofthe cohort default rate under this paragraph.

(C)Once the sample of loans has been established, theguaranty agency shall provide a copy of all servicingand collection records relating to each loan in thesample to the institution in hard copy format unless theguaranty agency and institution agree that all or some ofthe records can be provided in another format.

(D) The guaranty agency may charge the institutionareasonable fee for copying and providing thedocuments, not to exceed $10 per borrower file.

(E) After compiling the servicing and collection records forthe loans in the sample, the guaranty agency shall sendthe records, a list of the loans included in the sample,and a description of how the sample was chosen to theinstitution. The guaranty agency shall also send a copyof the list of the loans included in the sample, listed in


260


order by social security number, and the description ofhow the sample was chosen to the Secretary at thesame time the material is sent to the institution.

(F) If the guaranty agency charges the institution a fee forcopying and providing the documents under paragraph(f)(iii)(D) of this section, the guaranty agency is notrequired to provide the documents to the institution untilpayment is received by the agency. If payment of a feeis required, the guaranty agency shall notify theinstitution, in writing, within 15 working days of receipt ofthe institution's request, of the amount of the fee. If theguaranty agency does not receive payment of the feefrom the institution within 15 working days of the date theinstitution received notice of the fee, the institution shallbe considered to have waived its right to challenge thecalculation of its cohort default rate based on allegationsof improper loan servicing or collection in regard toloans guaranteed by that guaranty agency. The guarantyagency shall notify the institution and the Secretary, inwriting, that the institution has failed to pay the fee andhas apparently waived its right to challenge thecalculation of the cohort default rate. The Secretary willdetermine that an institution which does not pay therequired fee to the guaranty agency has not met itsburden of proof in regard to the loans insured by thatguaranty agency unless the institution proves that theagency's conclusion that the institution waived its appealwas incorrect.

(iv) After receiving the relevant loan servicing and collectionrecords from all of the guaranty agencies that insured loanswhich are included in the cohort default rate calculation, theinstitution has 30 calendar days to file its appeal with theSecretary. An appeal is considered filed when it is receivedby the Secretary. If the institution is also filing an appealunder paragraph (d)(1)(i) of this section, the institution maydelay submitting its appeal under this paragraph until theappeal under paragraph (d)(1)(i) is submitted to theSecretary. As part of the appeal, the institution must submitthe following information to the Secretary:

(A) A list of the loans which the institution alleges would, dueto improper loan servicing or collection, result in aninaccurate or incomplete calculation of the cohort defaultrate.

(B) Copies of all of the loan servicing or collection recordsFY 1996 Official Cohort Default Rate Guide

261

Time frame for submittingloan servicing appeal to

Me Department

Loan servicing appealrequirements

Page 25

Appendix E2Pertinent Parts of Related Regulations

and any other evidence relating to a loan that the institu-tion believes has been subject to improper servicing orcollection. The records must be in hard copy or micro-fiche format.

(C) A copy of the lists provided by the guaranty agenciesunder paragraph (e)(2) of this section.

(D) An explanation of how the alleged improper servicing orcollection resulted in an inaccurate or incompletecalculation of the cohort default rate.

(E) A summary of the institution's appeal listing the numberof loans insured by each guaranty agency that wereincluded in the calculation of the institution's cohortdefault rate and the number of loans that would beexcluded from the calculation of that rate byapplicationof the results of the review of the sample of loansprovided to the institution to the population of loans foreach guaranty agency.

(F) A certification by an authorized official of the institutionthat all information provided by the institution in theappeal is true and correct.

(v) The Secretary or his designee reviews the informationsubmitted by the institution and issues a decision.

(A) In making a decision under this paragraph theSecretary presumes that the information provided bythe guaranty agency is correct unless the institution.provides substantial evidence showing that theinformation maintained by the guaranty agency is notcorrect.

(B) If the Secretary finds that the evidence presented by theinstitution shows that some of the loans included in thesample of loan records reviewed by the institutionshould be excluded from calculation of the cohort defaultrate under paragraph (0(2) of this section, the Secretaryreduces the institution's cohort default rate, inaccordance with a statistically valid methodology, toreflect the percentage of defaulted loans in the samplethat should be excluded.

(vi) The Secretary notifies the institution, in writing, of thedecision.


262


(vii) An institution may not seek judicial review of theSecretary's determination of the institution's cohort defaultrates until the Secretary or his designee issues thedecision under paragraph (f)(3)(v) of this section.

(viii) For purposes of this paragraph, a default is considered tohave been due to improper servicing or collection only if theborrower did not make a payment on the loan and theinstitution proves that the lender failed to perform one ormore of the following activities:

(A) Send at least one letter (other than the final demandletter) urging the borrower or endorser to makepayments on the loan if the lender was required to sendsuch letters;

(B) Attempt at least one phone call to the borrower orendorser, if such attempts were required;

(C) Submit a request for preclaims assistance to theguaranty agency, if such a request was required;

(D) Send a final demand letter to the borrower, if required;and

(E) If required, the lender did not submit a certification (orother evidence) that skip tracing was performed.

(i) Effect of decision.

An institution may challenge the calculation of a cohort defaultrate under this section no more than once. The Secretary'sdetermination of an institution's appeal of the calculation of acohort default rate is binding on any future appeal by theinstitution. An institution that fails to challenge the calculation ofa cohort default rate under this section within 10 working daysof receiving notice of the determination of the cohort defaultrate is prohibited from challenging that rate in any otherproceeding before the Department.

(j) Review of default rate data.

Effective on October 1, 1994, an institution has an opportunityto review and correct the information provided to the Secretaryby the guaranty agencies for the purpose of calculating acohort default rate on the loans to be included in the calculationof the institution's cohort default rate before the final rate iscalculated.

',Defaults that are due to,''-impro`kr loan servicing,

and collection

.

Draft 'data review proceis


263

Appendix E2Pertinent Parts of Related Regulations

(1) (i) Once the Secretary has received the information used incalculating the cohort default rates from the guarantyagencies, the Secretary calculatesdraft cohort default ratesfor each institution.

(ii) The Secretary sends all institutions with draft cohort defaultrates equal to or in excess of 20 percent, a copy of theinformation provided by the guarantyagencies in regard toloans included in the institution's cohort default rate.

(iii) An institution with a draft cohort default rate less than20 percent will receive a notice of the draft default rate andmay request a copy of the information provided by theguaranty agencies within 10 working days of receiving thenotice from the Secretary. Upon receiving the request fromthe institution, the Secretary will send the institution a copyof the information requested. The time frames provided inthis paragraph will not start until the institution receives theinformation from the Secretary.

(2) Within 30 calendar days of receiving the default rateinformation from the Secretary, the institution must notify theguaranty agency of any information included in the default ratedata that it believes is incorrect. The institution must alsoprovide the guaranty agency with evidence that it believessupports its contention that the default rate data are incorrect.

(3) Within 30 days of receiving the institution's challenge underparagraph (h)(2) of this section, the guaranty agency shallrespond to the institution's challenge. The guaranty agency'sresponse must include a response to each allegation of errormade by the institution and any evidence supporting theagency's position.

(4) The guaranty agency shall provide a copy of its response to theinstitution to the Secretary and identify any errors in theinformation previously submitted to the Secretary.

(5) The information usedlo calculate cohort default rates will bechanged to reflect allegations oferror made by an institution,confirmed by the guaranty agency and accepted by theSecretary prior to releasing final cohort default rates.

(6) The draft default rate issued by the Secretary under paragraph(h)(1) of this section may not be considered public informationand may not be otherwise voluntarily released by the Secretaryorthe guaranty agency.


264


(7) An institution may not appeal a cohort default rate underparagraph (d)(1) of this section on the basis of any allegederrors in the default rate information unless errors wereidentified by the institution in a challenge to its preliminarydefault rate under paragraph (h) of this section.


265

U387 Commenas on theiFY V996 Mega§ Cohan

Deaus218ege Guilds

User Comments Worksheet 3

FY 1996 Official Cohort Default Rate Guide Page 1:

266

Appendix F User Comments

User Comments on theFY 1996 Officio§ Cohort Mat& Rage Guide

Please TYPE or PRINT the following. The Department may contactyou for further clarification on your comments.

Organization Name:School OPE-ID # (if applicable):Organization Mailing Address:

Person completing this form:Telephone number: (

Was the Guide easy to read and understand? U YES U NO

Did you like the separation of appeal information from general cohort

default rate information? U YES U NO

Did this format make it easier for your school or Guaranty Agency to

prepare its appeal/response? I:j] YES U NO

Were the instructions and spreadsheets easy to follow and understand?U YES U NO

Are there issues that were not discussed in the Guide that you would

like to see in future editions? U YES 01 NO

If sent by commercial overnight mail/courierdelivery, send your comments to:

U.S. Department of EducationDefault Management DivisionAttn: Guide CommentsROB-3, Room 39057th and D Streets, SWWashington, DC 20202-5353

If sent by U.S. Postal Service, send your comments to:

U.S. Department of EducationDefault Management DivisionAttn: Guide CommentsROB-3, Room 3905600 Independence Avenue, SWWashington, DC 20202-5353


267

PublAsheci October '998

268

U.S. Depariment of Educe MonWaal* Von, DIC 20202

2 6

U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and improvement (OEMEducational Resources information Canter (ERIC)

NOTICE

REPRODUCTION BASIS

ERIC

This document is covered by a signed "Reproduction Release(Blanket)" form (on file within the ERIC system), encompassing allor classes of documents from its source organization and, therefore,does not require a "Specific Document" Release form.

This document is Federally-funded, or carries its own perrnission toreproduce, or is otherwise in the public domain and, therefore, maybe reproduced by ERIC without a signed Reproduction Releaseform (either "Specific Document" or "Blanket").

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